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JPMorgan Elect will introduce borrowings in income pool

JPMorgan Elect will introduce borrowings in income pool – JPMorgan Elect has published its annual report covering the year ended 31 August 2017. The Managed Growth portfolio delivered a total return on net assets of 20.2%, compared with the portfolio’s benchmark which returned 16.7%. The share price total return was 19.6%. For the year ended 31st August 2017 the Board declared dividends of 11.00p per Managed Growth share compared to 8.70p for the year ended 31st August 2016. The Managed Income portfolio delivered a total return on net assets of 14.9% compared with the portfolio’s benchmark index which returned 12.3%. The share price total return was 15.5%. Dividends for the year ended 31st August 2017 totalled 4.20p per share, an increase of 7.7% on 2016. The Managed Cash share class returned 0.8% on net assets and a dividend of 0.35p per share was paid for the year ended 31st August 2017.

The trust expanded by taking in GBP21.5 million of net assets from JPMorgan Income and Growth and GBP14.0 million of assets from M&G High Income Investment Trust.

Changes to the Managed Income pool

With effect from 1st March 2018 the benchmark for the Managed Income share class will be changed from a composite benchmark comprising 85% the All-Share Index and 15% the Bloomberg Barclays Capital Global Corporate Bond Index to the All-Share Index. They say that this brings the Managed Income share class into line with the vast majority of investment trusts in the AIC’s UK Equity Income Sector and better reflects the underlying portfolio where there is very little exposure to bonds. Secondly, it is proposed that the manager be permitted to introduce modest levels of gearing into Managed Income, with a view to enhancing returns. This brings the Managed Income class into line with most of its competitors and provides the manager with a tool which the board hopes will benefit both the capital and income returns to shareholders. They expect the Managed Income share class to operate within a gearing range of 85% to 112.5% and have negotiated a GBP10 million, two year revolving credit facility with Scotiabank which the Manager will be able to deploy from the date of the Annual General Meeting in January 2018. In introducing bank debt into the Managed Income share pool the Board has considered the extent to which this leverage may alter the risks faced by Managed Growth and Managed Cash shareholders. It is satisfied that the modest levels of gearing being introduced to the Managed Income pool and the covenants in place mean that there is no material change in the risks faced by Managed Growth and Managed Income investors.

 

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