Fund Research

JPMorgan Multi-Asset Trust

Last update 10 May 2018

JPMorgan Multi-Asset Trust is a new investment trust that was offered to shareholders of JPMorgan Income and Capital Trust (which had a fixed winding-up date of 28 February 2018) who wished to continue or “roll-over” their investment, rather than receive cash.

JPMorgan Multi-Asset trust employs a multi-asset strategy, with a high degree of flexibility to invest across asset classes, geographies and sectors. The aim is to use asset allocation and diversification to generate a long-term total return of around 6% per annum net of fees, with a volatility of two-thirds of that of equities.

Given over half the portfolio (65% as at 31 March 2018) is invested in equities, the team stress that this is not an absolute return fund, and that market beta will be the key driver of returns going forward. Market exposure will be actively managed and reflect the latest macro views of the team.

The main comparable existing investment trust is Aberdeen Diversified Growth and Income. Aberdeen have had the mandate for under a year, yields 4.6% and trades on a discount of c.4%. In our view the performance track record on either trust is not long enough to draw any relative performance conclusions.

The objective of JPMorgan Multi-Asset Trust is to provide a dividend yield of 4% (dividend of 4p on the initial 100p launch price) in the first year, as well as capital growth. The dividend will be paid quarterly.

The board have indicated that they are looking to insulate shareholders from discount volatility, but have also undertaken to seek to maintain a mid-market share price which is close to the NAV through buy backs or share issuance. Given the fact that all of the underlying funds (except that of the infrastructure allocation) have daily liquidity, we do not see any structural reasons why the board wouldn’t be able to maintain their discount policy once the company has distributable reserves to fund buy backs. That having been said, the discount has sagged since launch and during April has widened past 5% on a consistent basis, which could be an interesting entry point for investors.

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