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JPMorgan Multi-Asset (MATE)

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Thursday 10 October, 2019

JPMorgan Multi-Asset

Half-year Report

RNS Number : 4834P
JPMorgan Multi-Asset Trust plc
10 October 2019
 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN MULTI-ASSET TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED
31ST AUGUST 2019

 

Legal Entity Identifier:

549300C0UCY8X2QXW762

Information disclosed in accordance with DTR 4.2.2

 

CHAIRMAN'S STATEMENT

Introduction

The Company's objective is to generate income and capital growth through a multi-asset strategy, while seeking to maintain lower levels of volatility than an institutional equity portfolio. Our commitment to this objective is underpinned by the Company's distribution policy, which aims to achieve a yield of 4.0% on the Initial Issue Price of £1.00 per share. The Company has used the advantages of investment trust status to access less liquid areas of the market, such as by investing over 10% of its portfolio in an unlisted JPMorgan managed infrastructure fund, with the aim of generating sustainable and growing income.

Portfolio Performance

During the half year to 31st August 2019, the Company recorded a positive total return of 6.0% on its opening net asset value, a highly creditable outperformance of 3.3% over the Company's Reference Index in testing market conditions. The Company's Reference Index, comprising the LIBOR one-month sterling rate plus 4.5% per annum, is used instead of a benchmark, since it is considered more closely to reflect the profile of the Company's portfolio.

Macroeconomic uncertainty has continued to be a significant feature, leading to bouts of market volatility across all asset classes. Trade tensions between the United States and China have been a significant factor, leading to declining business confidence, as illustrated by deteriorating manufacturing purchasing managers' indices (PMIs). Consumer spending has generally been more resilient. Central banks across the world have responded with reduced interest rates and have undertaken other actions to boost economic activity. Further details of the portfolio are provided in the investment managers' report on page 9 of the half year report and financial statements.   

Share Price Performance

The Company recorded a positive share price total return to shareholders of 3.2% during the half year to 31st August 2019. The price of the Company's shares has traded at a discount to net asset value throughout the period. On 31st August 2019, this discount was 10.8%. The average discount during the period was 9.2%, with the shares trading between discounts of 7.7% and 10.8%. During the half year, the Company bought back 165,000 shares, with the overall impact of such buybacks improving the total return on its opening net assets by 0.02p.

Revenue and Distributions

During the half year to 31st August, 2019, the Company's net return after taxation was £5,143,000. In the period up to the signature of this half year report, the Board has declared two interim distributions, each of 1.0 pence per share, in respect of the Company's year ending 29th February 2020. The Company has not elected to 'stream' any part of these distributions and therefore both are designated wholly as dividend for tax purposes. Further details of the tax implications for shareholders of the interest 'streaming' regime can be found on page 16 and 72 of the Company's Annual Report.

Outlook

Your investment managers believe that the global economy is in the latter stage of the economic cycle and that the possibility of a recession has somewhat increased. The investment environment has become more uncertain, with market sentiment appearing to be highly dependent upon the readiness of Central Banks to soften monetary conditions. The investment managers' review provides more detail on their assessment of the overall economic background and prospects. The Board has been impressed with the approach taken by the investment managers in navigating volatile markets over the last 18 months, particularly in response to frequent short term changes in market sentiment. 

The Board believes that the JPMorgan Investment Management team are well placed to manage the portfolio and to achieve the objectives of generating income and capital growth which the Company set at launch.

 

Sir Laurence Magnus

Chairman                                                                                                                                          10th October 2019

 

INVESTMENT MANAGERS' REPORT

Investment approach

We aim to construct a portfolio which is designed to be flexible with respect to asset class, geography and sector of investments and will seek to achieve an appropriate spread of risk by investing in a diversified global portfolio of securities and other assets. This flexibility allows us to take advantage of the best opportunities to generate income and growth. We take a medium to long term view of markets, acting on investment themes that we believe are appropriate for such a period.

Market review

At the start of the period the macro backdrop looked increasingly supportive as the US Federal Reserve (the Fed) revised down its interest rate forecast profile and the European Central Bank (ECB) similarly adopted a more dovish tone. Added to this, global survey data was encouraging and positive developments were reported on US-China trade talks.

First-quarter GDP surprised positively in the US, Eurozone and China. Results from the first quarter US earning season were reasonable corroborating some of the economic data. However, trade tensions reappeared and escalated in May. The US announced a tariff increase and plans to expand tariff coverage to all Chinese goods, and restricted trade with Chinese technology giant, Huawei. China responded more forcefully than previously, raising tariffs and creating its own restricted list. The US also announced plans to raise tariffs on Mexican goods. With this backdrop and a modest slowdown in global growth data, riskier assets performed poorly in May. Developments in trade relations between the US and other countries have been a key driver of market sentiment.

The new escalation in trade tensions was short-lived and sentiment recovered in June, as the US suspended plans to impose tariffs on Mexican goods and markets began to anticipate a positive US-China meeting at the G20 Summit, which occurred at the end of the month with both parties agreeing to re-engage in negotiations.

Markets recovered their poise with equities hitting new highs in July. However, at the end of July and in early August the calm was broken with renewed trade tensions and currency battles creating headwinds for markets. Increasing dovishness, relative to market expectations, from the Fed has been mirrored by other central banks, which is likely to be a theme for the rest of 2019.

Though we still do not forecast a near-term recession, we acknowledge the probability has increased due to ongoing trade and currency battles and concern about the degree of dovishness of the Fed relative to market expectations. In the US, the economic outlook remains robust with continued strength of the consumer somewhat offset by weakness in manufacturing. We continue to watch for any signs of weakness in the labour market, as an early indicator of potentially weaker consumer spending.

Portfolio review

The Company has a dual objective of delivering income and growth to shareholders. The equity portfolio still favours names with sustainable dividend yields trading at attractive valuations, particularly in sectors such as telecommunications, utilities and insurance. Within insurance, European insurers including Swiss Reinsurance and Munich Reinsurance are included in the portfolio. Utilities remain a key part of the portfolio, with stocks such as Spanish electricity company, Iberdrola and the Italian electricity company, Enel. Over the period, our position in the telecommunications sector included European stocks such as Telenor and Orange due to these firms' strong operational execution and financial performance in home markets and value creating strategies for geographic expansion. We reduced positions in sectors such as basic industries and healthcare, the latter driven by the potential regulatory changes in the US which may be adverse for American managed care companies such as United Health. Despite the introduction of companies such as Nestle, the Swiss consumer products firm, consumer staples remains one of the portfolios less favoured sectors At a stock level, we further reduced exposure to North America and Japan and added to continental Europe, where valuations and dividend yield potential is increasingly attractive. However, we use index futures to reflect top down views on markets, which enable us to maintain positions in high conviction dividend-paying stocks where our views are driven by individual company specific drivers.

We continue to hold exposure to infrastructure, primarily through the Infrastructure Investment Fund (IIF UK 1LP), a JPMorgan managed open ended private fund, and 3i Infrastructure, a third party investment trust. This is an asset class which provides diversification to the portfolio and is attractive in the context of prospects for both yield and capital growth.

In fixed income, we still hold core Government fixed income via futures in the US and have significantly increased our exposure over the period, from 4% at the end of February. Our government bond positioning is in part a hedge against our equity positioning, but we also see pockets of value in bond markets. As an example. We held long Italian bond futures from June to August as we saw an increasing chance that the ECB would add monetary stimulus to the Euro region. We have reduced our high yield bond allocation, noting the less liquid characteristics of the asset class that can come to the fore in late cycle. Our overall fixed income duration has increased from 1.5 years at the end of February to 2.2 years at the end of August.

Performance

The Company delivered a positive total return on net assets over this period of 6.0%. This was an out performance of 3.3% against the Company's Reference Index. Almost all components of the portfolio contributed positively to performance. The portfolio's equity exposure, which is run by specialist equity investors in JPMorgan Asset Management's International Equity Group, was a significant contributor to absolute performance. Our regional equity positioning through index futures was also beneficial. Within fixed income, high yield was the largest positive contributor to absolute performance while government bonds and emerging market debt also added value. Our increased allocation to infrastructure provided a positive contribution to the portfolio.

Outlook

Although we acknowledge that the possibility of a recession over the next 12 months has increased, continued easy monetary policy from all major developed market central banks is likely to provide ongoing support to the business cycle. Although manufacturing data has slowed, at least in part due to ongoing trade disputes, labour markets remain strong supporting real wage growth and underpinning consumer spending. The U.S. remains our most preferred equity region from a top down perspective, where we have highest confidence in the growth outlook. We retain a neutral view to emerging markets, as we note the ongoing risks that trade disputes pose, and maintain a cautious view towards high yield debt at this point in the economic cycle. We continue to favour infrastructure, which provides a good source of diversification, attractive yield and positive return profile.

 

Katy Thorneycroft

Gareth Witcomb

Investment Managers                                                                                                                           10th October 2019

 

INTERIM MANAGEMENT REPORT

The Company is required to make the following disclosures in its Half Year Report:

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company fall into five broad categories: investment and strategy; accounting, legal and regulatory; corporate governance and shareholder relations; operational; and financial. Information on each of these areas is given in the Company's Strategic Report within the Annual Report and Financial Statements for the period ended 28th February 2019.

Related Parties Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the period.

Going Concern

The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and, more specifically, that there are no material uncertainties relating to the Company that would prevent its ability to continue in operational existence for at least twelve months from the date of the approval of this interim financial report. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i)      the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with FRS104 'Interim Financial Reporting' and gives a true and fair view of the assets, liabilities, financial position and net return of the Company as required by the UK Listing Authority Disclosure and Transparency Rules ('DTR') 4.2.4R; and

(ii)     the interim management report includes a fair review of the information required by DTR 4.2.7R and 4.2.8R.

In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

•        select suitable accounting policies and then apply them consistently;

•        make judgements and accounting estimates that are reasonable and prudent;

•        state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

•        prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

and the Directors confirm that they have done so.

 

For and on behalf of the Board

Sir Laurence Magnus

Chairman                                                                                                                                          10th October 2019

STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31ST AUGUST 2019

 

(Unaudited)

(Unaudited)

(Audited)

 

Six months ended

Period ended

Period ended

 

31st August 2019

31st August 2018

28th February 2019

 

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Gains on investments held at

 

 

 

 

 

 

 

 

 

  fair value through profit

 

 

 

 

 

 

 

 

 

  or loss

-

9,150

9,150

-

 3,841

 3,841

-

1,991

1,991

Net foreign currency losses

-

 (5,832)

 (5,832)

-

 (2,545)

 (2,545)

-

(628)

(628)

Income from investments

2,416

-

2,416

2,036

 -

 2,036

4,041

-

4,041

Interest receivable

87

-

87

 60

-

 60

24

-

24

Gross return

2,503

3,318

5,821

 2,096

 1,296

 3,392

4,065

1,363

5,428

Management fee

(91)

 (167)

 (258)

 (93)

 (172)

 (265)

(180)

(333)

(513)

Other administrative expenses

(155)

-

 (155)

 (156)

 -

 (156)

(450)

-

(450)

Net return before finance

 

 

 

 

 

 

 

 

 

  costs and taxation

2,257

3,151

5,408

 1,847

 1,124

 2,971

3,435

1,030

4,465

Finance costs

-

(1)

 (1)

 (1)

 (2)

(3)

(1)

(2)

(3)

Net return before taxation

2,257

 3,150

5,407

 1,846

 1,122

 2,968

3,434

1,028

4,462

Taxation (charge)/refund

(313)

49

 (264)

(152)

 -

 (152)

(273)

22

(251)

Net return after taxation

1,944

3,199

5,143

1,694

 1,122

 2,816

3,161

1,050

4,211

Return per share (note 3)

2.26p

3.71p

5.97p

1.85p

1.22p

3.07p

3.54p

1.18p

4.72p

 

 

 

STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31ST AUGUST 2019

 

Called up

 

 

 

 

 

 

share

Share

Special

Capital

Revenue

 

 

capital

premium

Reserve1

Reserves1

Reserve1

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Six months ended 31st August 2019 (Unaudited)

 

 

 

 

 

 

At 28th February 2019

931

-

84,925

1,050

495

87,401

Repurchase of shares into Treasury

-

-

(157)

-

-

(157)

Net return

-

-

-

3,199

1,944

5,143

Distributions paid in the period (note 4)

-

-

-

-

(1,724)

(1,724)

At 31st August 2019

931

-

84,768

4,249

715

90,663

Period ended 31st August 2018 (Unaudited)

 

 

 

 

 

 

At 19th December 2017

-

-

-

-

-

-

Issue of ordinary shares at launch on 2nd March 2018

931

92,184

-

-

-

93,115

Fund launch expenses

-

 (683)

-

-

-

(683)

Redesignation of share premium

-

 (91,496)

 91,496

-

-

-

Repurchase of shares into Treasury

-

-

 (5,497)

-

-

(5,497)

Net return

-

-

-

1,122

1,694

2,816

Distributions paid in the period (note 4)

-

-

-

-

(929)

(929)

At 31st August 2018

931

 5

85,999

1,122

765

 88,822

Period ended 28th February 2019 (Audited)

 

 

 

 

 

 

At 19th December 2017

-

-

-

-

-

 -

Issue of ordinary shares at launch on 2nd March 2018

931

 92,184

-

-

-

93,115

Fund launch expenses

-

 (688)

 (32)

 -

-

 (720)

Redesignation of share premium

-

 (91,496)

91,496

 -

-

-

Repurchase of shares into Treasury

-

-

(6,539)

-

-

 (6,539)

Net return

-

-

-

1,050

3,161

 4,211

Distributions paid in the period (note 4)

-

-

-

-

 (2,666)

 (2,666)

At 28th February 2019

931

-

 84,925

1,050

495

87,401

1 The distributable part of these reserves form the distributable reserve of the Company and may be used to fund distributions to investors via distribution payments.

STATEMENT OF FINANCIAL POSITION

AT 31ST AUGUST 2019

 

(Unaudited)

(Unaudited)

(Audited)

 

31st August 2019

31st August 2018

28th February 2019

 

£'000

£'000

£'000

Fixed assets

 

 

 

Investments held at fair value through profit or loss

84,281

 85,652

83,013

Current assets

 

 

 

Derivative financial assets

689

818

1,978

Debtors

472

304

456

Cash and short term deposits

5,861

2,373

3,463

 

7,022

3,495

5,897

Current liabilities

 

 

 

Creditors: amounts falling due within one year

(538)

(140)

(309)

Derivative financial liabilities

(102)

(185)

(1,200)

Net current assets

6,382

3,170

4,388

Total assets less current liabilities

90,663

88,822

87,401

Net assets

90,663

88,822

87,401

Capital and reserves

 

 

 

Called up share capital

931

931

931

Share premium

-

5

-

Special reserve

84,768

85,999

84,925

Capital reserves

4,249

1,122

1,050

Revenue reserve

715

765

495

Total shareholders' funds

90,663

 88,822

87,401

Net asset value per share (note 5)

105.3p

101.7p

101.3p

 

 

STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31ST AUGUST 2019

 

(Unaudited)

(Unaudited)

(Audited)

 

Six months ended

Period ended

Period ended

 

31st August 2019

31st August 2018

28th February 2019

 

£'000

£'000

£'000

Net cash outflow from operations before distributions and

 

 

 

  interest

(501)

(36)

(466)

Dividends received

1,694

1,262

2,460

Interest received

488

428

973

Overseas tax recovered

3

4

6

Interest paid

(1)

(3)

(3)

Net cash inflow from operating activities

1,683

1,655

2,970

Purchases of investments and derivatives

(29,836)

(118,126)

(132,424)

Sales of investments and derivatives

38,471

36,461

52,074

Settlement of forward foreign currency contracts

 (4,601)

(3,395)

(2,717)

Settlement of future contracts

 (1,252)

(294)

191

Net cash inflow/(outflow) from investing activities 

2,782

(85,354)

(82,876)

Issue of ordinary shares at launch

-

93,115

93,115

Fund launch expenses

-

(720)

(720)

Repurchase of shares into Treasury

 (342)

(5,399)

(6,354)

Distributions paid

 (1,724)

(929)

(2,666)

Net cash (outflow)/inflow from financing activities

 (2,066)

86,067

83,375

Increase in cash and cash equivalents 

2,399

2,368

3,469

Cash and cash equivalents at start of period

3,463

-

-

Exchange movements

 (1)

5

(6)

Cash and cash equivalents at end of period

5,861

2,373

3,463

Increase in cash and cash equivalents 

2,399

2,368

3,469

Cash and cash equivalents consist of:

 

 

 

Cash and short term deposits

1,963

1,080

2,431

Cash held in JPMorgan Sterling Liquidity Fund

3,898

1,293

1,032

Total 

5,861

2,373

3,463

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31ST AUGUST 2019

1.       Financial statements

The information contained within the financial statements for this half year report has not been audited or reviewed by the Company's auditors.

The figures and financial information for the year ended 28th February 2019 are extracted from the latest published financial statements of the Company and do not constitute statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies and including the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.       Accounting policies

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' of the United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the revised 'SORP') issued by the Association of Investment Companies in November 2014 and updated in February 2018.

FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting Council ('FRC') in March 2015 has been applied in preparing this condensed set of financial statements for the period ended 31st August 2019.

All of the Company's operations are of a continuing nature.

The accounting policies applied to this condensed set of financial statements are consistent with those applied in the financial statements for the year ended 28th February 2019.

 

 

 

 

3.       Return per share

 

(Unaudited)

(Unaudited)

(Audited)

 

Six months ended

Period ended

Period ended

 

31st August 2019

31st August 2018

28th February 2019

 

£'000

£'000

£'000

Return per share is based on the following:

 

 

 

Revenue return

 1,944

1,694

3,161

Capital return

 3,199

1,122

1,050

Total return

 5,143

2,816

4,211

Weighted average number of shares in issue

86,138,011

91,775,740

89,193,741

 

 

 

 

Revenue return per share

2.26p

1.85p

3.54p

Capital return per share

3.71p

1.22p

1.18p

Total return per share

5.97p

3.07p

4.72p

4.       Distributions paid

 

(Unaudited)

(Unaudited)

(Audited)

 

Six months ended

Period ended

Period ended

 

31st August 2019

31st August 2018

28th February 2019

 

£'000

£'000

£'000

2020 first interim distribution paid of 1.0p (2019: 1.0p)

861

929

929

2019 second interim distribution paid of 1.0p

n/a

n/a

872

2019 third interim distribution paid of 1.0p

n/a

n/a

865

2019 fourth interim distribution of 1.0p

863

-

-

Total distribution paid in the period

 1,724

929

2,666

A small portion of the Company's distributable capital reserves were utilised for the payment of the above distributions to shareholders.

A second interim dividend of 1.0p per share, amounting to £861,000 has been declared payable on 8th November 2019 in respect of the year ending 29th February 2020.

5.       Net asset value per share

 

(Unaudited)

(Unaudited)

(Audited)

 

Six months ended

Period ended

Period ended

 

31st August 2019

31 August 2018

28th February 2018

Net assets (£'000)

 90,663

 88,822

87,401

Number of shares in issue

86,096,408

 87,361,408

86,261,408

Net asset value per share

105.3p

101.7p

101.3p

 

JPMORGAN FUNDS LIMITED

10th October 2019

 

For further information, please contact:

Paul Winship

For and on behalf of

JPMorgan Funds Limited

020 7742 4000

 

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

JPMORGAN FUNDS LIMITED

ENDS

A copy of the half year will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do

The half year will also shortly be available on the Company's website at www. www.jpmmultiassettrust.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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