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QuotedData’s morning briefing 12 October 2022

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In QuotedData’s morning briefing 12 October 2022:

  • JPMorgan Multi-Asset Trust (MATE) has announced its interim results for the half year ended 31 August 2022. During the period, MATE provided an NAV total return of -6.4%, which was an underperformance of 9.4% compared to the trust’s reference index (although it should be noted that MATE’s reference index is a total return of 6.0% per annum, measured over a rolling five year period, and so, unlike a typical benchmark, it is not a relative index and is unaffected by the market turmoil experienced during this reporting period). The chairman says that MATE’s NAV performance mirrors the declines in the wider market (following the invasion of Ukraine and the dramatically increased likelihood of a global recession due to elevated energy and commodity prices which have accelerated inflation levels and caused sharp increases in interest rates by many central banks). Towards the end of the reporting period and with the support of the Board, MATE’s manager transitioned its global equity exposure away from higher yielding companies to those that they believe offer superior returns over the long term. MATE recorded a share price total return of -4.1% during the period. Relative to its NAV performance, the decline in the share price was mitigated to some degree by the narrowing of the discount to net asset value at which the Company’s shares trade. The discount commenced the period under review at -4.2% but moved steadily inwards to close on 31st August 2022 at -1.8%. The Company’s share price on 7th October 2022 (the last practical date before printing this document), was 91.5p per share, with a discount to net asset value of -2.5%. Having paid two interim dividends of 1.1pper share for the first half, MATE’s board says that it continues to expect pay be able to pay a total distribution of 4.4p per share for the year ending 28th February 2023.

    MATE’s managers say that the portfolio’s developed equity exposure provided the largest negative contribution to return but performed ahead of the broad equity market, while its infrastructure exposure generated positive returns. The regional equity allocation decisions implemented via futures also provided a negative contribution to return. Over the period, MATE’s fixed income allocation failed to provide diversification benefits as the traditional correlation with equities broke down. MATE’s government bond positions suffered declines through the period. MATE held significant equity exposure in March 2022 and reduced this by over 15% by the period end as markets continued to grapple with stubbornly high inflation, central bank tightening and a slowdown in global growth.

  • Further to the announcement made on 14 September 2022 that it was throwing in the towel, Fundsmith Emerging Equities (FEET) has published a circular proposing its voluntary winding-up (you can read more on the reasons for the proposed wind up here). The general meeting is scheduled for 11 November and assuming that shareholders approve the wind up resolutions it is expected that FEET’s shares will be cancelled from trading with effect from 8am on 14 November 2022 with an expected payment date for the initial distribution on or around 18 December 2022.
  • abrdn Property Income Trust (API) has completed an extension to its debt facilities with the Royal Bank of Scotland International (RBSI). API currently has two facilities with RBSI, a £110m term loan and a £55m Revolving Credit Facility (RCF), which are both due to expire in March 2023. An extension has been agreed for a three year tenor with a term loan of £85m and an RCF of £80m. The new facility will start in March 2023 with a margin of 150bps over Sonia for both the term loan and the RCF. It is intended that the term loan will be fully drawn on commencement. The RCF will be used to provide liquidity for the company. The company has entered into a forward interest rate Swap on the full amount of the term loan. The RCF will have a floating rate based on the prevailing Sonia rate. The cost of the Swap is 5.47% (giving an all-in rate of 6.97% on the £85m borrowed under the term loan). The company’s LTV at 30 June 2022 was 21.05%, within its target range of 20-30%.

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