JPMorgan Fleming has created the elect investment trust by restructuring two existing trusts -JPMorgan Fleming Managed Income and JPMorgan Fleming Managed Growth.
The new trust has three share classes but it is not a split capital trust. The managed growth share class invests in a range of JPMorgan Fleming closed-ended and open-ended funds such as JPMorgan Fleming Claverhouse, JPMF UK dynamic fund and JPMorgan Fleming overseas. It will invest around 65 per cent in the UK, with the remainder going overseas.
The managed income share class is designed to provide a growing income with the potential for capital growth by investing in closed-ended funds, fixed-interest securities and fixed interest funds managed by JPMorgan Fleming and other fund managers.
Between 85 per cent and 100 per cent will go into high-yielding UK equities, with the remainder in fixed-interest. High-yielding equities will be selected according to factors such as dividend yield, earnings and interest rates..
There is a third option that is only available to investors in the other share classes as a shelter from equity markets. Managed cash shares are designed to preserve capital and provide a yield based on short-term interest rates by investing in at least five sterling liquidity funds.
Although the new trust will not use gearing, it will be indirectly geared because some of the underlying investments will be geared investment trusts. Gearing enhances returns when performance is good but introduces an element of risk as losses are magnified when the trusts fall in value. Some of the underlying trusts will take their charges from the capital, so this will also have an indirect impact on the new trust.
According to Standard & Poor's JPMF managed income is second out of 6 trusts and JPMF managed growth is ranked 17 out of 30 trusts based on £1,000 invested on a mid-to-mid basis with net income reinvested over three years to January 20, 2003