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JPMorgan to unveil emerging income fund

JPMorgan Asset Management is planning to launch UK’s first global emerging market income trust, with an initial 4 per cent target yield.

Richard Titherington, the head of emerging market equities at the group, will manage the trust as a diversified portfolio of dividend-paying stocks.

He says investors have traditionally seen emerging markets as a source of growth but many countries are maturing into consistent income generators.

“This is due to emerging market companies adopting an increasingly disciplined approach to investment and the interests of shareholders, reflected in falling levels of debt and a willingness to pay dividends,” he says.

“Even during the recent economic crisis, many maintained robust payout ratios in excess of 30 per cent.”
With a 4 per cent yield target at launch, the trust will also aim to offer a progressive dividend. Titherington will have 50-70 holdings and the vehicle will measure performance against the MSCI Emerging Markets TR Net Index (GBP).

JP Morgan head of investment trusts David Barron says: “UK investors have traditionally looked close to home for equity income, but with UK equity income increasingly dependent on just a few companies and sectors, we believe people should be looking more widely to satisfy their search for equity income and growth.”

He also notes the revenue reserve element of the investment trust structure, allowing the team to retain up to 15% of revenues each year to maintain future dividends if necessary.

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