Two trusts that merged last year will be absorbed into a third fund in order to reduce costs and diversify their portfolios.
The board of JPMorgan Elect has signed heads of terms with its counterpart at JPMorgan Global Growth & Income (JGGI) over a proposed merger between the two trusts, according to a statement to the stock exchange yesterday (October 28).
The boards listed seven benefits to the merger, including a lower management fee and ongoing charges, and an increase in scale which improve secondary market liquidity for investors as well as cost efficiencies.
JP Morgan will make a contribution to the cost of the merger, which if approved by shareholders will take place before the end of the year.
The merger will create a fund with assets of £1.7bn.
JP Morgan Global Growth & Income merged with the Scottish Investment Trust at the end of last year, creating a fund which had assets in excess of £1.3bn at the end of June this year.
Last October, the merger between JGGI and the Scottish Investment Trust was announced, months after the latter announced a review of its investment management arrangements.
JGGI has previously been described by the former chair of the Scottish Investment Trust as “style agnostic” between value and growth.
The trust currently invests in 50 - 90 stocks, and aims to provide a return above MSCI’s All Country World Index, making quarterly dividend payments of at least 4 per cent of total NAV.
JPMorgan Elect offers investors three different share classes, ‘managed growth’ which focuses on long-term capital growth, ‘managed income’ which aims to provide both growth and income, and ‘managed cash’ which allows investors a temporary home for their cash as they switch from growth to income stocks.
sally.hickey@ft.com
