JPMorgan Global Growth & Income to combine with JPE

[BobGe]

Whilst I'm not suggesting JPM Elect performance is outstanding, to make a direct comparison with JGGI is like chalk and cheese. Ignoring the 'Cash' and 'Income' segments, JPE 'Growth' wasn't too bad until 2022 and had since fallen much as the general market in which it's invested. JGGI has faired more favourably as it has large US weighting in stocks which have perhaps held up a little better and it has benefitted considerably from exchange rate movements (when viewed in GBP). In that there is an obvious issue with the proposed liquidation of JPE assets and re-investment into those favoured by JGGI. Exchange parity is presently suggested to be around USD1.40 / GBP1.00, but at, say, USD1.15... well, you can see the issue. Then there's the spreads and transactional costs. Who can know what might be the liquidation value of JPE assets over time (JPM don't know a timescale but it will extend beyond the year end) or the cost of re-investment into those of JGGI.

There is a proposed exit route within the JPE/JPEI/JPEC plans but JPM make the comment that the exchange facility may be limited, suggesting they realise that some may consider the proposals unfavourable and want out.

https://www.google.com/finance/quote/JP ... LON%3AJGGI

It will be interesting to see the vote!

[BobGe]

It is now the day before broker deadlines for JPM Elect holders to decide if they should elect to convert to another class at 30th November (and exit, if that is the holder's preference) or to remain in and be converted to JGGI in due course, however JPM have not notified regarding the GM in respect of the JPM Elect class vote to approve or reject the proposed scheme. After this quarterly 'conversion window' closes (on the 15 November 2022, but 11th for Crest and earlier still for Nominees) the only alternative would be to sell in the market. Given the situation it would seem that may provide Market Makers with an opportunity to make hay.

Not what I'd call a favourable timetable of events.

Q. Would JPM need a 75% approval to get this scheme through? Would that be 75% of the vote or 75% of the issued share class?


"Expected timetable"
"It is currently envisaged that a circular and notices of general meetings and class meetings setting out the details of the Scheme will be sent to JPE shareholders, and that a prospectus will be published by JGGI in respect of the Scheme, by the end of November 2022. The Scheme and the Proposals are anticipated to be completed by the end of the current calendar year."

[richfool]

An extract from a Kepler Intelligence Report on JGGI.

JGGI’s wider-than-average discount may offer long-term investors an opportune entry point following the successful merger with SCIN…
Overview

JPMorgan Global Growth & Income (JGGI) takes a high-conviction approach to investing in the broad and diversified global equity markets, the managers selecting from the best ideas of JPMorgan’s huge equity research platform in order to provide a balanced core portfolio. The structure of the trust is designed to deliver both capital growth and income to investors while affording the managers full freedom to implement their investment approach. JGGI recently completed a merger with Scottish Investment Trust (SCIN) on 01/09/2022, which saw net assets grow from £723m to £1.3bn, leading to JGGI’s graduation to the FTSE 250 Index and a reduction in Charges. On 27/10/2022 JGGI’s board published proposals to merge with JPMorgan Elect, which would be completed on similar terms and see net assets grow to above £1.7bn (using 25/10/2022 valuations).

There has been no change to the investment approach, JGGI’s portfolio continuing to be managed by Helge Skibeli, Rajesh Tanna and Timothy Woodhouse, who remain focussed on delivering superior returns to the benchmark MSCI All Country World Index. The Dividend policy means the board has committed to pay out 4% of the financial year-end NAV as a dividend, using capital if necessary. As discussed under Portfolio, this affords the managers the freedom to invest wherever they see the best total returns without yield, i.e. in lower-income-producing but growthier companies which are often off limits to their equity income peers.

As a result, JGGI has performed well over five years whilst also delivering a yield to investors, achieving a total return of 60.4%, compared to the global equity income peer group’s 33.1% and the MSCI All Country World Index benchmark’s 45.6%.

The trust is currently trading at a Discount of 2.5%, significantly off its five-year average premium of 2.1%.

Article continues....
https://www.trustintelligence.co.uk/inv ... m=research

[Dod101]

Interesting that JGGI has now transformed itself from a small to medium sized IT with assets of around £670 million at 30 June 2022 to a good sized IT with assets of around £1.5 billion at 31 December 2022 following the merger first with Scottish Investment Trust and then JP Elect. In the process, existing shareholders like me have been significantly diluted since the increase has been mostly/all effected by the issue of new shares in JGGI. Of course there are advantages in that the management fee has now effectively been reduced to 0.46% rather than the 0.56% previously. They have also removed the performance fee,

However, the targeted dividend yield on assets of 4% means that the dividend is to be held for the year to 30 June 2023 (well an increase from 16.96p to 17p per share) It could be argued of course that that is as much to do with the market performance as the mergers/takeovers.

The NAV at 31 December 2022 was 429p against 403p at 30 June 2022 and 432p a year earlier.. These takeovers have not so far done much for shareholders. However I am attracted to JGGI as it produces good diversification away from the UK and it will come good again I have no doubt.

As it is trading just below NAV there is an acceptable yield on the share price.

Dod

PS Just realised that this is in effect a rehash/updated on the report above, kindly supplied by richfool. Put it down to the New Year.

[Lootman]

In the process, existing shareholders like me have been significantly diluted since the increase has been mostly/all effected by the issue of new shares in JGGI.

Have you really been diluted though?

Yes, new shares have been issued. But new assets have been added. So the asset value per share need not have changed. If there are now twice as many shares and the value of the fund is double what it was, then your percentage ownership of the fund has halved. But the value of your holding has not changed. You now have a smaller proportion of a larger fund.

Or am I missing something?

[Dod101]

In the process, existing shareholders like me have been significantly diluted since the increase has been mostly/all effected by the issue of new shares in JGGI.

Have you really been diluted though?

Yes, new shares have been issued. But new assets have been added. So the asset value per share need not have changed. If there are now twice as many shares and the value of the fund is double what it was, then your percentage ownership of the fund has halved. But the value of your holding has not changed. You now have a smaller proportion of a larger fund.

Or am I missing something?

I think that for existing shareholders there is no benefit except a reduction in management expenses which is of course to be welcomed. For existing shareholders there is no doubt that their share of the total economic value has been diluted, halved in fact, considering the NAV of the Trust has more than doubled from £670 million at 30 June 2022 to about £1.5 billion at 31 December. It is like the trust having had a giant fund raising except that existing shareholders did not get a look in.

The dividend is set at 4% of the assets but now that 4% has to be spread amongst twice as many shareholders and effectively there is no increase in the dividend for the current year. I am though considering increasing my holding because I like the international diversification provided by this trust and hopefully we will have no more takeovers in the near future.

Dod

[Arborbridge]

The dividend is set at 4% of the assets but now that 4% has to be spread amongst twice as many shareholders and effectively there is no increase in the dividend for the current year. I am though considering increasing my holding because I like the international diversification provided by this trust and hopefully we will have no more takeovers in the near future.

Dod

The cake is twice as big, divided into twice as many portions. Unless the new assets are considerably less desirable than the existing JGGI ones, there is no difference to me - apart from the fact that fees are spread among more shareholders, and that I own a smaller proportion of this bigger pie.

The uncertainty is only about the quality of the assets and the growth therof, AFAIK.

Arb.

[richfool]

JGGI to takeover assets of MATE.

Cross post: viewtopic.php?p=642267#p642267