JPMorgan Core Real Assets (JARA) has released annual results for its financial year end 28 February 2023.
- Over the 12 month period JARA reported a NAV total return of 11.6% and share price total return of 7.0%.
- A major factor in driving JARA’s positive performance was its unhedged currency exposure, particularly its large exposure to USD denominated assets. Over the year the US dollar appreciated strongly against GBP, and is reflected in JARA’s performance. In local currency terms JARA’s NAV increased by 3.9%.
- Of JARA’s multiple underlying strategies, global transportation, global infrastructure, and Asia Pacific real estate were the largest contributors to its performance.
- JARA’s discount widened from 10.8% at the start of its financial year to 14.9% at the end. At the time of writing JARA trades on a 11.1% discount. JARA was able to grow its share capital by c.1% over the period, issuing 2m new shares.
- JARA paid dividends totalling 4.05p per share, a 0.05p increase on the prior year’s.
JARA’s chairman, John Scott, commented:
“The current environment is both at the political and macro level one of the most uncertain in the last decade, if not since the global financial crisis of 2008/09. The public capital markets have adjusted rapidly to the increase in central bank rates and monetary tightening; the private markets have begun this process, but the market has been and will continue to go through a process of price discovery as views on the trajectory of inflation and rate movements become clearer and therefore allow both buyers and sellers to focus on what is an acceptable range of pricing.
“The resetting of rates has also led many investors to revisit levels of leverage and portfolio allocations, leading to a large dispersion of sector and asset level returns. In many ways the Company was designed with such an environment in mind, given that its exposure to multiple asset classes and interest rate environments ensures that no one external change either at the monetary, economic or political level should threaten the viability of the Company. Overall, the Board believes that the Company is well placed to continue navigating the evolving core real asset landscape, given the experience and scale of the underlying strategies and overall size and reach of the Alternatives Platform. The Board is confident that the portfolio will, in aggregate, benefit from the inflation which has become a feature in all Western economies, and which seems likely to be with us for some time. On the basis of this confidence, the Board envisages providing shareholders with a progressive dividend profile, paid quarterly, but as in the Period under review, with increments paid as part of the fourth distribution.
“There remains a significant appetite for new capital, not least in the area of decarbonising our energy cycle, notably the substitution of wind, solar and nuclear electricity for fossil fuelled generation. An advantage enjoyed by your Company is that, even as the current environment sees capital raising in the investment trust market all but closed, the underlying strategies in which the Company is invested, given their perpetual life and core nature, are able to recycle capital and change their allocations to adapt to this shift. Global, secular trends such as the drive to net zero and increasing digitisation of industry and consumer experience, will be long term asset growth drivers, fundamental to shaping the economies of tomorrow. JARA, through its underlying portfolios, is well placed to harness these opportunities.”