Investment trust insider on JPMorgan Russian – James Carthew: Russia yields compelling if oil price holds up
So, it turns out that after Bahrain the place to be invested last year was Russia with the MSCI Russia index returning 45.1%. As you may know, the pure play on this market is JPMorgan Russian Securities (JRS) which just beat the index with 45.3% growth in net asset value.
The trust’s formal benchmark is actually the RTS index, which it lagged by 4%, but nevertheless, the underlying NAV has matched the RTS over five years and beaten it over a decade, according to Morningstar.
Last year JRS shareholders got the added comfort of a significant re-rating in the shares, which narrowed their discount to NAV to deliver a 55.2% total return.
The strong performance inevitably attracted investors but a buyback programme begun in 2017 also helped. The company bought back 6.3% of its shares in the financial year to 31 October 2019, helping to lower the discount from 15% last summer to 10% today.
With a market value of £355m, JRS is still a decent size although its share register is dominated by a two large investors – City of London Investment Management and Lazards – who hold around half of the stock between them.
Another draw for investors must be the dividend yield which, even after last year’s strong share price performance, is still around 4.5%. Russian companies have been encouraged to pay dividends by the state, which is often a large shareholder. JRS was able to increase its dividend from 26p to 35p over the financial year while topping up its revenue reserves.
There was no doubt that, going into 2019, the Russian stock market was cheap… read more here