JPMorgan Emerging Markets extends record of outperformance – over the 12 months ended 30 June 2021, the trust’s return to shareholders was 36.2% and the return on net assets 32.7%. This compares to 26.0% for the MSCI Emerging Markets index. The chairman notes that most of the outperformance came in the first half of the financial year, when the return on net assets was 24.9% against a benchmark return of 18.5%. However, the company held onto its gains in the second half despite the significant rotation in markets towards cyclical stocks and deep value stocks, which do not feature in its portfolio. The trust is not managed to produce income. The total dividend for the year will be 1.35p against an adjusted 1.42p last year, which is a reduction of 4.9%.
Fee cut
Following a review of fees in the industry, the investment management fee has been changed. With effect from 1st July 2021, the investment management fee will be charged at the rate of 0.75% per annum on the value of the company’s total assets less current liabilities (previously at the rate of 1% up to £500 million and at the rate of 0.75% thereafter). This will bring the ongoing charges ratio down to approximately 0.83% which continued to be the lowest in the emerging markets investment trust sector and one of the lowest ratios across the emerging markets open ended investment companies (OEICs) as at the end of the financial year.
Return drivers
“Stock selection was once again the main contributor to outperformance over the year with country allocation marginally detracting. Stock selection has added value every year for the last seven years and demonstrates the integrity and strength of Austin Forey and his team’s process of investing in companies with sustainable business models and responsible management. Looking at the outperformance over the last five years, it is interesting that the main contributions have come from markets in EMEA (Europe, the Middle East and Africa) and Latin America, with the Eastern European, software services company, EPAM, being the outstanding performer. In Latin America, the two main contributors to outperformance over the last five years have been Argentina’s Mercadolibre, an e-commerce and fintech business, and the IT and software company Globant. This illustrates the benefit of being an active investment manager and having the resources and ability to find the best stockpicking opportunities across a broad global emerging market universe rather than confining investment to one country or area.”
JMG : JPMorgan Emerging Markets extends record of outperformance