Jupiter Emerging and Frontier Income considers scheme of reconstruction – Further to its announcement on 24 February 2022, the board of Jupiter Emerging and Frontier Income (JEFI) has concluded that it would be in its best interests and those of its shareholders as a whole to put forward proposals for the members’ voluntary liquidation of the company.
The board is conscious of the current size of the trust, the risk of further shrinkage through redemptions and the limited opportunities for growth against the backdrop of a deteriorating international outlook. The recent invasion of Ukraine has only served to reinforce the board’s reservations.
As part of these proposals, the board is considering a scheme of reconstruction which, in addition to a full cash exit less costs, would include an optional rollover of the company’s assets into another vehicle. A further announcement will be made in due course.
[QD comment: JEFI’s board announced on 24th February that, after further consultation with JEFI’s largest shareholders, it had concluded that there wasn’t likely to be sufficient support for its proposals. It had planned to amend the redemption facility (making it a three-yearly event) and provide a three-yearly continuation vote. Without support, it seemed likely that a wind-up of the trust was on the cards.
As such, while this most recent announcement is not really a surprise, it is nonetheless disappointing. We think that JEFI offered a distinctly different investment proposition – a combination of income and capital growth from a portfolio of emerging and frontier market securities; a decent yield (the highest in the sector); and, ignoring the single country funds, has provided a return during the last three years that is close to twice the sector median. We would therefore have hoped that the board’s proposals, which should have helped address the issue of its size, could have found a wider base of support. JEFI’s strategy is a good diversifier and it will be difficult to find this elsewhere.
In circumstances like these, we would like to see a rollover into another investment company offered. Unfortunately, given the current environment, every single emerging market investment company is trading on a discount, and so it may make sense for investors to take cash and reinvest it in the market.]
JEFI : Jupiter Emerging and Frontier Income considers scheme of reconstruction