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JPM Managed Growth vs Managed Income?

Closed-end funds and OEICs
Amaryllis
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JPM Managed Growth vs Managed Income?

#26018

Postby Amaryllis » January 25th, 2017, 11:51 am

Another missive from AJ Bell, telling me I need to respond to a 'corporate event' relating to my JP Morgan Managed Income shares:

"Based upon the Respective Assets Value shareholders can convert part or all of their holding into one or more of the other share classes (Managed Growth Shares and/or Managed Cash Shares)...."

According to JPMorgan's literature:
Managed Growth - a fund of funds portfolio focused on capital growth in UK and global equities
Managed Income - a directly invested UK equity portfolio focused on dividend income growth

MORGENSTERN says :"With net assets of about GBP272.2 million, JPMorgan Elect has three share classes, each with distinct investment policies, objectives and underlying investment portfolios. Conversion between those share classes is allowed on a quarterly basis. Its Managed Growth share class aims for long-term capital growth from investments in investment trusts and open-ended funds managed in the main by JPMorgan Asset Management. The Managed Income class seeks to grow income with potential for long-term capital growth by investing in equities, investment companies and fixed income securities, while the Managed Cash class looks to preserve capital with a yield based on short term interest rates by investing in liquidity funds and short dated AAA-rated UK or G7 government securities hedged into sterling. "There is a high degree of overlap between the underlying holdings of the company and those of JPMorgan Elect's Managed Income share class, and the company's shareholders will have the option to benefit from continuity of management as the company's portfolio managers are also responsible for managing JPMorgan Elect's portfolio," JPMorgan Income & Growth said in a statement."

I'm a bit lost. As I understand it, NAV doesn't actually matter, and the 2 funds have similar discounts (1.46% vs 2.19%). According to Trustnet, the Income Fund performs somewhat better than the Growth Fund (11.9 vs 15.7% over the past year). Both seem are focused on long-term capital growth, and I'm not sure whether investments via investment trusts and open-ended funds (Growth Fund) are 'better' than investing directly in equities, investment companies and fixed income securities (Income Fund).

Help please...

hiriskpaul
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Re: JPM Managed Growth vs Managed Income?

#26230

Postby hiriskpaul » January 25th, 2017, 11:49 pm

They make this offer every year. If you are happy with the investment just ignore it. It is totally impossible to say which IT will perform better in future. If it was, or even if one was more likely to perform better than the other, everyone would just flip into the IT that delivered the best performance and the other would be wound up.

Someone might prefer a lower dividend income if for example they were likely to pay tax on the dividends. In which case JETG might be preferable to JETI. Other people might prefer the higher dividend yield of JETI. I hold JETI, but could not give 2 hoots about the dividend yield as I hold in an ISA and any income is reinvested. I chose JETI because I was looking for a European "Value" fund at the time and this was a better fit than JETG.

The discounts to NAV by the way are -9.8% for JETG and -10.9% for JETI. If/when they get near the (1.46% vs 2.19%) you quoted I would sell and buy a European Value Factor ETF.

dlp6666
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Re: JPM Managed Growth vs Managed Income?

#26283

Postby dlp6666 » January 26th, 2017, 10:15 am

I suppose the same sort of considerations would apply, but isn't 'amaryllis' actually referring to the choice between JPE (JPM Elect - managed growth) and JPEI (JPM Elect - managed income), rather than JETG and JETI (of which I do hold some of the latter, for much the same reasons as 'hiriskpaul')?

hiriskpaul
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Re: JPM Managed Growth vs Managed Income?

#26354

Postby hiriskpaul » January 26th, 2017, 3:25 pm

dlp6666 wrote:I suppose the same sort of considerations would apply, but isn't 'amaryllis' actually referring to the choice between JPE (JPM Elect - managed growth) and JPEI (JPM Elect - managed income), rather than JETG and JETI (of which I do hold some of the latter, for much the same reasons as 'hiriskpaul')?

Apologies to amaryllis for what must have been a confusing response to his posting!

dlp6666 is quite right, I am talking about entirely different JPM trusts, hence the difference in discount. By the look of it, JPM are offering the same sort of swap option with Elect as with JETI/JETG. So my comments should apply to JPM Elect as well. This is an opportunity to change to the other trust, but no need to if you don't want to. Do nothing and you will stay as you are. Not sure why anyone would want the cash fund right now, but the option of that is available as well if you want it.

The Growth IT has significantly outperformed the Income fund, but I would not read much into that. The Growth fund invests globally, the income fund only in the UK and UK stock market has had relatively poor performance compared to foreign stock markets. That may or may not continue - nobody knows.

Amaryllis
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Re: JPM Managed Growth vs Managed Income?

#26635

Postby Amaryllis » January 27th, 2017, 10:54 am

Thank you all for your detailed replies - much appreciated.

I think I'll just stick with my default option and do nothing...


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