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Investment trust insider on global equity income funds

Investment Trust Insider on Perpetual Income and Growth

Investment trust insider on global equity income funds – James Carthew: Scottish gone, it’s Majedie’s turn to merge

One of the big surprises of last year was Scottish (SCIN) opting to be absorbed by JPMorgan Global Growth and Income (JGGI). Last week Scottish announced that its portfolio was now aligned with JGGI’s.

Scottish’s shareholders approved the appointment of JP Morgan as manager and the shift to matching JGGI’s portfolio in December 2021, but the actual combination of the two companies is not expected to happen for a few more weeks yet. It will need to be approved by both sets of shareholders, but I am not expecting much dissent.

Before deciding to merge with a rival, Scottish’s performance had disappointed for a while. Fund manager Alasdair McKinnon had a value style of investing, and as we know, that was out of favour for a long time. Ironically, Scottish has been doing much better recently, with investment returns beating its acquirer by more than 11 percentage points over the past six months. Its rise in net asset value (NAV) also tops the global growth sector over this period by some distance.

JGGI invests in more lower-yielding but faster-growing companies than is typical for an income fund, topping up its dividends with distributions from capital. It is not buying speculative growth companies, however. The sell-off in that part of the market has not much affected it, therefore JGGI’s NAV is up over the past month. However, Scottish’s value stocks have been in demand, and this has driven its outperformance….   read more here

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