InvestmentsJan 16 2015

JPMAM warned £220m Asian Investment Trust must improve

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JPMAM warned £220m Asian Investment Trust must improve

JPMorgan Asset Management (JPMAM) has been criticised for “disappointing performance” on the £220m Asian Investment Trust and told it must improve.

The board of the trust has warned JPMAM it “must now see significant performance improvement in 2015”, and has scheduled an investor vote over whether the trust should simply be shut down.

The vote is planned for 2016 and the board said its recommendation to shareholders on how to vote at that time would depend on how the JPMAM managers fare in 2015.

A rejection of the upcoming ‘continuation vote’ would see the trust wound up and the cash proceeds returned to shareholders.

The trust has underperformed its investment trust peer group and its MSCI Asia ex Japan index benchmark in the past three and five years, according to data from FE Analytics.

However, the JPMAM team has delivered stronger recent underlying performance, which has led to a narrowing of the difference between the trust’s share price and the net value of its assets – known as the discount.

Figures from FE Analytics show the trust has generated a total return of 10.6 per cent in the past six months, compared with 6.6 per cent from the peer group and 1.1 per cent from the index.

In January 2013, JPMAM transferred the management of the trust to the team of Ted Pulling, Sonia Yu and Jeffrey Roskell in Hong Kong.

Investment trust analysts at Numis said while performance from the new team was initially “dull”, the managers had delivered “strong recent performance”.

Numis welcomed the board’s tough approach, saying it was positive that it was “putting pressure on the manager to deliver improved performance”.

In addition to the continuation vote threat, the board has negotiated to remove the performance fee payable to JPMAM, which previously stood at 15 per cent of any index outperformance plus 1.5 per cent, capped at 0.75 per cent of average gross assets.

However, the performance fee has not been paid since 2007 and Numis said there was “significant underperformance to be made up before a performance fee would be paid”.

JPMorgan Asset Management declined to comment.