JPMorgan’s Asian Investment Trust has dropped its performance fee and put the manager on notice for review after it again underperformed its benchmark, returning 6 per cent against the MSCI Asia ex Japan Index’s 8.1 per cent for the year to 30 September.
The independent trust directors’ statement read that the return to ordinary shareholders was 5.2 per cent, reflecting a slight widening of the company’s discount from 10.7 per cent to 11.4 per cent.
In the light of disappointing performance the board has again held detailed discussions with senior management at JPMorgan Asset Management as to the “effectiveness of the investment process for the company and the justification for their continuing appointment as its investment managers”.
Company chairman James Long said: “The board, the manager and, as we know from consultation conducted by our broker, our major shareholders are all in accord that we must now see significant performance improvement in 2015.”
The board resolved that JPMAM will remain the company’s manager for 2015, but will introduce a new and additional continuation vote at the 2016 Annual General Meeting, with the recommendation at that vote largely depending on performance next year.
“It is encouraging to note that, since the period end, the company’s relative performance has markedly improved and its discount has narrowed,” Mr Long added.
Given the underperformance, the investment trust’s performance fee has now been removed at the Board’s request, leaving only a management fee.
“This change, which also reflects a move by many other investment trusts to simplify their management fee structures, took effect from 1 October 2014,” stated Mr Long.
There is no increase in the base management fee, which remains at a rate of 0.6 per cent per annum, based on market capitalisation.
Revenue per share for the year amounted to 2.23p and the board is recommending a final dividend of 2.20p which, if approved by shareholders, will be payable on 3 February 2015.
The company has a £25m three-year multi-currency loan facility with Scotiabank in place which will expire in December 2016. The investment managers utilise draw downs from this loan facility to gear the portfolio, with the company currently 0.3 per cent geared.
In accordance with corporate governance best practice, all directors will be retiring and seeking re-election at the forthcoming AGM. The company recently announced the appointment of Dean Buckley as a non executive director with effect from 18 September, following the retirement of Andrew Sykes on 20 June.
Next year’s AGM will be held on 28 January, with a presentation by Ted Pulling, one of the company’s investment managers and the chief investment officer for JPMAM in Asia.
peter.walker@ft.com
