Thoughts on JSGI merger - take the cash?

[Azurephantom]

So, today's announcement is that JP Morgan Japan Small Cap Growth and Income (JSGI), is merging with JP Morgan Japanese (JFJ).

JSGI is currently the worst performer in my SIPP, so quite glad something is happening (with an uplift in price today).

Shareholders are being allowed to take cash for 25% of their investment at a 2% discount to NAV. I'd appreciate any thoughts on whether this is a "good deal" or whether letting the whole amount roll into JFJ would in all likelihood be better?

[tacpot12]

A 2% discount of NAV doesn't sound like a good deal. I think I'd let it roll over to JFJ and see what happens.

[scrumpyjack]

The average discount for ITs is far more than 2%, so if I were you I would take as much in cash as I could and reinvest in another IT.

[Azurephantom]

Thank you both. I suppose JFJ is currently at an 8.8% discount, so if the full NAV value of the investment is moved in, this might be better as I can take advantage of that discount. JSGI and JFJ don't seem to have performed all that well, but might give JFJ a chance to remedy things and the new fund fees should be lower.

[scrumpyjack]

But as far as I can see you do not get the shares in the merged IT at a discount. It is done on an adjusted net asset value basis and then the market will decide what the merged trusts share price. So, as far as I can see you will almost certainly be better off taking as much in cash as possible and then investing that cash in the merged trust.

[Azurephantom]

Thank you, that's a good point that I hadn't appreciated. I'd assumed the choice was cash (but penalty is 2% under NAV for taking it) or to have the full NAV being used to "buy" the interest in JFJ.

I suppose I'll wait until I see the final offer documents when the vote takes place in October and if terms are as you say, I'll look to extract the cash and reinvest in JFJ (or top up another holding).

[Dumbo]

So, today's announcement is that JP Morgan Japan Small Cap Growth and Income (JSGI), is merging with JP Morgan Japanese (JFJ).

JSGI is currently the worst performer in my SIPP, so quite glad something is happening (with an uplift in price today).

Shareholders are being allowed to take cash for 25% of their investment at a 2% discount to NAV. I'd appreciate any thoughts on whether this is a "good deal" or whether letting the whole amount roll into JFJ would in all likelihood be better?

A poor deal for shareholders in my opinion. I've held this one for 4 years and had a very steady and reliable income stream. The share price has been awful, down about 30% since purchase but I never purchased the shares for total return. I was quite happy to let this one roll on taking dividends on a quarterly basis.

There is nothing wrong with mergers of IT's if the objectives of the shareholders are aligned. However JP Morgan Japanese (JFJ) seems to me to be a fairly typical Total Return fund, whereas JP Morgan Japan Small Cap Growth and Income (JSGI) is a growth and income fund. From my point of view I cannot see any point in holding the merged fund when it occurs. I will be looking to find another growth and income fund or adding the proceeds to my current holdings.

Seems great business for JP Morgan though, getting assets on the cheap.

[TheSlowHare]

Hi Dumbo/everyone

I agree with your sentiment, and reasons for owning JSGI. How you decided on a suitable replacement vehicle?

Based on (similar-ish) geographically location and NAV-based dividend approach, I am looking at taking as much cash as permitted on re-investing into JAGI.

Thoughts?

[Dumbo]

Hi Dumbo/everyone

I agree with your sentiment, and reasons for owning JSGI. How you decided on a suitable replacement vehicle?

Based on (similar-ish) geographically location and NAV-based dividend approach, I am looking at taking as much cash as permitted on re-investing into JAGI.

Thoughts?

Good luck with JAGI.

As for me, I'm pretty fed up with IT's at the moment. This is the second time in the last few years an IT has for whatever reason, ceased to exist. I was unlucky enough to have a few quid in Jupiter Emerging and Frontier Income Trust PLC. They decided to go into liquidation a while back.

I'm now looking at some ETF's that hopefully won't quit when the going gets tough. I've already got a holding in a couple of Income paying ETF's and am looking at a couple of these: - https://www.morningstar.co.uk/uk/news/2 ... ncome.aspx

All the best.

[Lootman]

So, today's announcement is that JP Morgan Japan Small Cap Growth and Income (JSGI), is merging with JP Morgan Japanese (JFJ).?

Ironically I sold a fairly large and profitable position in JFJ this past May and bought JSGI as I wanted more small-cap exposure in Japan.

And now I am back in JFJ again?

I may sell and buy Baillie Gifford Shin Nippon IT.

[TheSlowHare]

Sorry, I have just seen the replies.

As for me, I'm pretty fed up with IT's at the moment.

I agree, am trying to remain positive on ITs but am looking more seriously at ETFs.

Am sure you have heard of justetf.com. I have looked in the past, but will do so properly again (e.g. https://www.justetf.com/uk/etf-profile.html?isin=IE00B14X4T88#overview) to try and maintain some portfolio exposure to the Far East/Asia (if not solely Japan).

[Alaric]

I agree, am trying to remain positive on ITs but am looking more seriously at ETFs..

I am reasonably sure that some small ETFs have also given up and merged. If the fees for managing them aren't enough for the managers, are they not going to consider closure as an option?