JPMorgan Global Emerging Markets Income Trust (JEMI) has reported its unaudited half-year results for the six months ended 31 January 2025, delivering a NAV total return of +5.9%, ahead of the 4.9% total return provided by its benchmark, the MSCI Emerging Markets Index, while JEMI’s share price total return was more muted at +3.4%, as the discount to NAV widened from 10.5% to 12.9% over the period (all figures in sterling terms).
Performance was aided by stock selection and active discount management. The trust repurchased 9.4m shares during the period at an average discount of 12.8%, adding 1.8p to NAV. Over five years to 31 January 2025, JEMI has delivered a NAV total return of +39.5%, comfortably ahead of the +23.2% return from its benchmark. Shareholders have seen a total return of +31.3% over the same period.
The board has declared two interim dividends of 1.0p per share for the period, in line with the prior year. A second interim dividend will be paid on 22 April 2025.
Tender offer to support long-term performance
In a move to further support shareholder value and discount control, the board has announced the introduction of a five-year performance-based conditional tender offer. Taking effect from 1 August 2025, the offer will give shareholders the option to redeem up to 25% of their shares at a 2% discount to NAV (less costs) if the trust fails to outperform its benchmark on a NAV total return basis over the subsequent five years.
Chair Elisabeth Scott reiterated the board’s confidence in the investment team and their disciplined process, stating that the board remains “enthusiastic about the many exciting opportunities offered by Emerging Markets.” She also acknowledged geopolitical risks, including the threat of a global trade war following the re-election of Donald Trump in the US, but praised the team’s long-term track record of navigating market volatility.
Portfolio positioning and outlook
Portfolio manager Omar Negyal remains focused on high-quality, income-generating businesses with strong balance sheets and sustainable dividends. He highlighted the benefits of JEMI’s underweight to India and exposure to Thai and Taiwanese financials and technology companies, which helped relative performance during the period.
Notable contributors included Fuyao Glass Industry and China Merchants Bank, while detractors included Xiaomi and Meituan – both unowned due to lack of dividends – as well as an underweight to Alibaba.
JEMI continues to tilt towards sectors like information technology, financials and consumer staples, with notable country overweights in Indonesia, Mexico and South Korea. While India remains a structural growth story, valuations remain challenging from an income perspective.
The trust increased its gearing modestly to 7.2%, supported by a new US$40m revolving credit facility from ICBC. The board expects borrowing costs to fall over time as global interest rates trend lower.
[QD comment MR: JEMI continues to offer investors a distinctive way to access emerging markets through a high conviction, income-focused strategy. Strong long-term outperformance and disciplined discount management – now bolstered by a conditional tender mechanism – should provide comfort for shareholders seeking both income and capital growth in a volatile asset class. As an aside, we are pleased to see that, while substantial, JEMI’s board has not opted for a 100% tender, as this could leave the trust a hostage to fortune in the event that it falls due at a time of market distress. With a greater prospect of recession in the US, and challenges ahead for all markets as the effects of rapidly shifting US trade policy spill over into them, emerging markets, whose performance is often less tied to other markets may be a useful diversifier and JEMI’s discount – 14.1% at the time of writing – could present an attractive entry point for long-term investors.]
