In the year to 30th June 2016, the total return on JPMorgan Global Convertibles Income’s net assets was 0.0% compared to -1.0% last year. The return to shareholders, which reflects the share price movement and the dividend, was -9.5%. Three quarterly dividends totalling 3.375p per share were declared and paid during the year. The Board declared a fourth quarterly dividend of 1.125p per share on 22nd September 2016.
The review period covered a number of significant market events, including a renewed downturn in energy prices, concerns over a Chinese slowdown, a widening of high yield credit spreads, an increase in the US Federal Reserve’s Target Rate and, most recently, the fallout from the UK Brexit vote. Despite the challenging backdrop, the Board is disappointed by the portfolio’s performance and the poor performance of the Company’s share price. While they continue to believe in the viability and attraction of the company’s income-focused convertible strategy, they have asked the Manager to consider why this is yet to be evidenced by performance.
The MSCI World Index (in sterling terms) is the fund’s reference index. The board believe that, since the launch of the company in 2013, it has become clear that a more appropriate measure of the Company’s performance is an appropriately constructed convertible bond index. With the assistance of the Manager, the Board has decided to resolve this issue by changing the reference index from the MSCI World Index to the Bloomberg Barclays Global Convertibles Credit/Rate Sensitive Index (hedged into sterling).
Currency exposure within the portfolio was hedged and so the fund did not benefit from sterling weakness. The managers say thy positioned the fund for a remain vote in the referendum – this was unhelpful. The statement gives no indication of how the fund’s individual positions contributed to the fund’s performance, or lack thereof.
JGCI : Board disappointed by JPMorgan Global Convertibles