JP Morgan’s Emerging Markets investment trust has delivered a net asset return for the year to the end of June of 12.7 per cent.
Alan Saunders, chairman of the trust, said after a period of prolonged weakness, emerging markets rallied strongly from January onwards but were still down on the year in local currency terms.
However, in sterling terms, Mr Saunders said investors received a positive return as a result of the sharp fall in sterling in the week after the UK's European Union referendum, which saw the nation vote for Brexit.
It was taking account of those currency fluctuations, that Mr Saunders said the investment trust was able to produced a return on net assets of 12.7 per cent compared with the benchmark index, the MSCI Emerging Markets Index (in sterling terms), which returned just 3.5 per cent.
Much will depend upon what happens in the developed world where economic growth is still below trend.-Alan SaundersMr Saunders said stock selection was again the most significant positive factor, adding about 7 per cent in relative performance over the past 12 months.
But the return to ordinary shareholders was 9.3 per cent, reflecting a widening of the discount over the year, from 10.7 per cent to 13.2 per cent.
As a result of the increased earnings per share, the dividend will be increased from 6p to 9p.
In terms of future returns, Mr Saunders said: “Some of the downward forces affecting emerging markets over the last two or three years appear to be moderating. Sentiment is no longer one way and some flows are going back into emerging markets.
“The economic fundamentals in Asia appear to be improving but that is not always the case elsewhere.
“Much will depend upon what happens in the developed world where economic growth is still below trend, but the period of underperformance of emerging markets seems to be near its end.
“Given that we still expect superior long term results in the emerging world, that provides some reason for optimism.”
