Investment trust insider on JPMorgan Multi Asset – James Carthew: JPMorgan’s MATE was a good idea no one wanted
Investment company merger proposals are still coming thick and fast. One of the latest is a proposed tie-up between JPMorgan Multi-Asset Growth and Income (MATE) and JPMorgan Global Growth and Income (JGGI).
JGGI has become the go-to partner for closed-end funds looking to offer their shareholders a new home. In a fairly short time, it has expanded to over £2bn in market value and, barring a wobble in the third quarter of 2022, its shares routinely trade above net asset value.
The premium rating is presumably the reason why MATE investors are not being offered the choice of a cash exit. The thinking must be that MATE shareholders who want cash can just sell their JGGI shares in the market. MATE has assets of about £71m and JGGI has been issuing a considerable amount of shares each month in response to demand – about £34m worth in December 2023 alone. It is unlikely JGGI’s share price would be much dented even if a sizeable chunk of MATE’s investors choose to sell.
Why might MATE shareholders opt out? Well for starters, they are going to take a meaningful hit to their income as MATE yields 4.9%, while JGGI’s yield is 3.7%, about a quarter less. This matters because MATE’s main appeal has been its income and, more recently, its board’s suggestion that it would aim to match dividend increases with inflation over time…. read more here