Today’s unprecedented pace of technological change is creating attractive investment opportunities across global markets and sectors. One of the most effective ways to capitalise on this growth potential is through investment trusts.
Investors increasingly seem to agree. In 2020, equity-oriented investment trusts raised £3.2 billion, a substantial leap from 2019’s record of £2.2 billion, with the number of equity investment trusts raising more than £50 million increasing from eight to 20.1
An investment trust is a professionally managed, closed-ended, pooled investment vehicle that offers a number of valuable benefits to investors, including:
- Closed-end Structure: Investment trusts tend to have a closed-end structure. By fixing the number of shares issued, the investment trust’s portfolio manager has the freedom to execute buy and sell decisions when the timing is most advantageous, rather than being subject to the vagaries of when investors decide to invest or sell trust shares. (Investors should note that closed-end trusts may trade at a premium or discount to their net asset value, potentially resulting in investors buying assets at a price above their market value or selling shares at a price below the underlying assets’ true market value.)
- Stock Market Listing: Investment trust shares are listed on the London Stock Exchange, which allows investors to conveniently buy or sell shares, and easily find the current price of shares.
- Ability to Borrow: Investment trusts can borrow to increase the amount of money invested (“gearing”), allowing them to quickly take advantage of emerging opportunities without having to sell existing holdings. Gearing can enhance returns during rising markets and exacerbate losses during declining markets.
- Accountability: An independent board of directors, elected by shareholders, oversees the operation and management of investment trusts. The board also has oversight of a fund manager’s performance and the power to replace an underperforming manager. Shareholders are provided the right to vote on all substantive issues that impact the trust’s management.
- Competitive Pricing: Investment trusts typically have lower operating costs than open-ended funds, which may result in greater wealth accumulation over the long-term.
- Steadier Income: An investment trust has the ability to retain up to 15% of its income in a given year, which can then be used to supplement income when needed in future years and help provide level income payments to investors.
Why J.P. Morgan Asset Management
Successfully tapping global investment opportunities via investment trusts requires an experienced and trusted partner with a long-term track record of strong performance.
At J.P. Morgan Asset Management, our singular goal for more than 150 years has been to help our clients build stronger portfolios. By working with us, institutions, intermediaries, and individual investors have benefited from key advantages unique to J.P. Morgan Asset Management, including:
- Size and scale: Responsible for USD 2.6 trillion in assets globally, J.P. Morgan Asset Management is supported by over 1,000 investment professionals with an annual research budget of USD 340 million, which is used for the expressed purpose of uncovering new investment opportunities and mitigating portfolio risks.2
- Wide range of choices: Our investment trusts cover a broad range of global markets, and investment styles to meet investors’ varied investment objectives and risk profiles.
- Performance results: Past performance, of course, should never be used to predict current or future returns. However, we do have a proud record of delivering attractive investment results. For example,
- Our JPMorgan Emerging Markets investment trust is the only trust to be awarded a Gold Morningstar Analyst Rating, along with its 5-star Morningstar rating.3
- The JPMorgan Global Growth & Income investment trust was recognized as one of the top performing trusts in utilizing gearing in 2020.4
- Four JPMorgan investment trusts were named as “value funds to watch”, including Russian Securities, European-Income, Elect-Managed Income, and Global Core Real Assets.6
- Our JPMorgan Emerging Markets investment trust is the only trust to be awarded a Gold Morningstar Analyst Rating, along with its 5-star Morningstar rating.3
- Deep-rooted culture: Sustained outperformance is a function of an enduring culture. Maintaining the continuity of the people and processes that created a record of historical achievement is foundational to future success.
Getting started
Long-term investors interested in the growth potential of global companies positioned to thrive amid the “fourth industrial revolution”, or those that simply want to build a stronger portfolio, should contact their financial adviser. For more information about the full range of J.P. Morgan investment trusts, including investment objectives, risks, and fees click here.
1 https://citywire.co.uk/investment-trust-insider/news/gavatar-are-investment-trusts-really-all-that-closed-ended/a1466569
2 https://am.jpmorgan.com/gb/en/asset-management/per/about-us/
3 https://www.morningstar.co.uk/uk/news/213910/3-emerging-markets-investment-trusts.aspx. © 2021 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
4 https://www.trustnet.com/news/5253585/the-investment-trusts-that-made-the-best-use-of-gearing-in-2020
5 https://www.trustnet.com/news/5053079/revealed-the-funds-that-have-surged-past-their-benchmarks-over-the-past-decade
6 https://citywire.co.uk/investment-trust-insider/news/the-rush-to-value-here-are-the-investment-trusts-to-watch/a1452797
7 https://www.jpmorgan.com/commercial-banking/solutions/asset-management