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JPMorgan Multi-Asset (MATE)

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Wednesday 17 October, 2018

JPMorgan Multi-Asset

Interim Results - Replacement

RNS Number : 3862E
JPMorgan Multi-Asset Trust plc
17 October 2018
 

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN MULTI-ASSET TRUST PLC

UNAUDITED INTERIM rESULTS FOR THE PERIOD ENDED
31ST AUGUST 2018

 

Legal Entity Identifier:

549300C0UCY8X2QXW762

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Introduction

I am pleased to present this first report to shareholders since the Company was launched on 2nd March 2018. The Company raised £93.1 million at launch and we are very appreciative of the support from investors, particularly the many former shareholders of JPMorgan Income & Capital Trust plc who chose to 'roll-over' their investment into the Company.

The Company's objective is to generate income and capital growth through a multi-asset strategy. Our commitment to this objective is illustrated by the Company's distribution policy, which aims to achieve a yield of 4.0% on the Initial Issue Price. In addition, the Company has used the advantages of investment trust status to access less liquid areas of the market, such as by investing approximately 11% of its portfolio in infrastructure funds, with the aim of generating sustainable and growing income.

Portfolio Performance

For the period to 31st August 2018, the Company recorded a positive total return of 3.4% on its net asset value, an outperformance of 0.8% to the Company's Reference Index. The Company's Reference Index is comprised of the LIBOR one-month Sterling rate plus 4.5%, which is used instead of a benchmark, as it is thought more closely to reflect the profile of the Company's portfolio.

During the period under review, markets have experienced some volatility due in part to trade tensions between the United States and China, deterioration of relations between the West and Russia and concerns over the rise of populism in Europe. However, overall economic data is positive with continuing global growth supported by generally accommodative government policies and muted levels of inflation which, so far, have only resulted in small incremental rises in interest rates. Further details of the portfolio are provided in the investment managers' report on page 8 of the Interim Report.

Share Price Performance

For the period to 31st August 2018, the Company recorded a slight negative total return of 0.3% on its share price.

The price of the Company's shares has traded at a discount to net asset value throughout most of the period. On 31st August 2018, the discount on the Company's shares was 3.1%. The average discount during the period was 4.8% with the shares trading between a premium of 0.4% and a discount of 8.5%

As referred to in the Company's Prospectus dated 24th January 2018, the Directors have been given authority to buyback 14.99% of the Company's Ordinary Shares. The Board has agreed a buyback and share issuance policy, with the purpose of preventing the discount on the Company's shares widening significantly in normal market conditions. During the period the Company bought back 5,754,235 shares following its successful application for a court order to approve the cancellation of its share premium account and filing of audited Initial Accounts.

The Directors have also been given authority to allot new ordinary shares for cash on a non pre-emptive basis. No new shares have been allotted during the period to 31st August 2018.

Revenue and Distributions

During the period the Company's net return on ordinary activities after taxation was £2,816,000.

Since the launch of the Company, the Board has declared two interim distributions each of 1.0 pence per share in respect of the financial period to 28th February 2019. The Board anticipates that in the absence of unexpected circumstances, the Company will have paid a total distribution of 4.0 pence per share in respect of the financial period to 28th February 2019, equating to a distribution yield of 4.0% on the Initial Issue Price. These figures are as forecast in the Company's Prospectus dated 24th January 2018.

The Company has elected to 'stream' part of the distribution and thereby pay both an ordinary dividend and a distribution designated as a payment of interest for tax purposes. Further details of the tax implications for shareholders of the interest 'streaming' regime can be found in Part 7 'Taxation' of the Company's Prospectus dated 24th January 2018 and in the announcement of the Company's first interim distribution dated 21st June 2018.

Change of Broker

In mid-August, the Board appointed Panmure Gordon as its sole corporate broker.

Outlook

Subject to the absence of a serious escalation of trade tensions between the U.S. and China or any other significant event which might threaten global growth, it appears reasonable to expect that the current positive economic environment will continue throughout the remainder of the Company's financial year ending 28th February 2019. The Board believes that the JPMorgan Investment Management team are well placed to manage the portfolio and to achieve the objectives which the Company set at launch.

 

Sir Laurence Magnus

Chairman                                                                                                                                     17th October 2018

 

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

Performance among major asset markets over the review period has improved after a slow start. In aggregate 2018 has proved to be a tougher environment for investors than 2017. Global politics have remained at the forefront of investors' minds and have continued to make headlines. At the beginning of the year the prospect of a trade war between U.S. and China dominated, alongside an escalation of tensions between the West and Russia over the situation in Syria and the ongoing tension between the U.S. and North Korea.  More recently, Italy's new populist government added to market concerns and caused a record plunge in Italian government bonds in May. In June, continued strength of the U.S. economy gave the Federal Reserve the confidence to raise interest rates again. By contrast, after poor data releases and a continued lack of inflation, the European Central Bank announced that interest rates would not be going up until next year. Despite the troubling trade headlines continuing into July, the tensions had little impact on corporate earnings with both sales and earnings exceeding analysts' estimates. Good economic news also propelled the 10-year U.S. Treasury yield to 3%. U.S. Dollar strength, signs of stress in the Turkish economy and volatility in the Italian government bond market weighed on returns globally towards the end of the review period, particularly across emerging markets. The stand-out exception was the U.S. equity market where the strong economic data, and a general absence of any inflation concerns, once again pushed the index higher. While performance across developed equity markets was positive over the period, emerging markets declined in local currency terms driven by ongoing risks from escalating trade disputes and a strong U.S. dollar. Performance across fixed income markets was mixed with emerging market debt posting negative returns and global high yield bonds making gains.

Portfolio review

We remain moderately positive on equities (supported by our view that global growth will remain above trend over the next several quarters) and have increased our overweight to equities compared to fixed income, relative to our strategic asset allocation, since the start of the review period.

Within equities, from an asset allocation perspective, we moved underweight emerging markets towards the end of the review period. The potential ongoing risks from escalating trade disputes, a strong dollar and tightening of financial conditions for emerging market economies causes us concern in the short-term. In order to see a bounce in emerging market assets, this would require a stabilization of the U.S. dollar, resurgence in global growth/industrial cycle, or upside surprises from favourable developments in trade or easing of financial conditions by Chinese authorities. Additionally, we have increased our overweight to U.S. equities given solid economic growth and a strong earnings backdrop, while the defensive nature of this market should provide an ongoing tailwind in both upside and downside scenarios relative to other regions. We are underweight Europe ex UK as it remains the least preferred equity region and serves as a source of funds to gain exposure to more favoured markets.

Within fixed income, relative to the funds strategic asset allocation, we continue to hold an overweight to high yield bonds and emerging market debt while we remain underweight government bonds. Over the period we have sold our allocation to corporate bonds and remain underweight versus our strategic asset allocation. We have increased our exposure to infrastructure significantly, adding the JPM managed Infrastructure Investments Fund in July while also continuing to hold a small position in 3i Infrastructure Plc. Therefore our aggregate infrastructure position is now overweight versus our strategic asset allocation. The addition of this strategy is beneficial for further diversification and expected contribution to the dual objectives of capital growth and income.

Our equity portfolio remains overweight financials and real estate at the sector level, and within financials we continue to favour the more sustainable dividends in insurance. We also remain overweight energy, however, we have significantly reduced the size of the U.S. positions after strong performance earlier in the year. Positions in technology and consumer staples were increased with Microsoft, for example, bought as a result of improving margins and compelling growth in their cutting edge cloud computing technology. Despite the additions of stock in companies such as PepsiCo, consumer staples remains one of the largest underweights, along with retail. Overall on a regional basis, we have reduced exposure to the United Kingdom and added to the U.S. and Switzerland, where manufacturing and consumer sentiment remains stronger placed to deliver above trend growth.

Performance review

JPMorgan Multi-Asset Trust plc

Since inception to 31st of August 2018

Share Price Total Return

(0.3%)

NAV Total Return1

3.4%

1 NAV returns are calculated on cum income debt at par

The portfolio's equity exposure, which is run by specialist equity investors in JPMorgan Asset Management's International Equity Group, was the largest positive contributor to absolute performance. While our overweight to physical equities was beneficial, our regional positioning through index futures provided a negative contribution to returns. Within fixed income, high yield was the largest positive contributor to absolute performance. The high yield market continued to perform strongly as better-than-expected earnings in August highlighted the solid fundamentals of U.S. companies. By contrast, emerging market debt was the greatest detractor as many emerging market countries have suffered from the ongoing trade war and the strength of the U.S. Dollar. Our increased allocation to Infrastructure provided a positive contribution.

Outlook

Global growth is set to remain above trend, but changes to U.S. trade policy and the impact of higher U.S. interest rates have increased the risks to our outlook. We retain a positive outlook overall, anticipating an economic and earnings environment consistent with equity outperformance of fixed income, but if our conviction in this positioning declines, we will look to trim equity positioning a little.

We expect U.S. interest rates to continue steadily tightening over coming quarters, but even then monetary policy will remain accommodative and supportive for risk assets into early 2019. Within asset classes, we have a preference for U.S. stocks over most other regions. We are more cautious on emerging markets as we see further headwinds from trade tensions.

 

Katy Thorneycroft

Gareth Witcomb

Investment Managers                                                                                                                  17th October 2018

 

INTERIM MANAGEMENT REPORT

The Company is required to make the following disclosures in its Interim 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.

Related Parties Transactions

JPMorgan Asset Management Holdings (UK) Ltd, an affiliate of the Company's Manager, acquired 1,639,968 ordinary shares of the Company during the period under review. As at 31st August 2018 JPMorgan Asset Management Holdings (UK) Ltd had reduced its holding to nil. No other 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 interim financial report has been prepared in accordance with the Accounting Standards Board's Statement 'Half-Yearly Financial Reports; 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                                                                                                                                          17th October 2018

 

 

 

 

 

 

 

 

 

 

STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD FROM INCORPORATION ON 19th DECEMBER 2017 TO 31st AUGUST 2018

 

(Unaudited)

 

Period ended

 

31st August 2018

 

Revenue

Capital

Total

 

£'000

£'000

£'000

Gains on investments held at fair value through profit or loss

-

 3,841

 3,841

Net foreign currency losses

-

 (2,545)

 (2,545)

Income from investments

2,036

 -

 2,036

Interest receivable

 60

-

 60

Gross return

 2,096

 1,296

 3,392

Management fee1

 (93)

 (172)

 (265)

Other administrative expenses

 (156)

 -

 (156)

Net return on ordinary activities before finance costs and taxation

 1,847

 1,124

 2,971

Finance costs1

 (1)

 (2)

 (3)

Net return on ordinary activities before taxation

 1,846

 1,122

 2,968

Taxation

(152)

 -

 (152)

Net return on ordinary activities after taxation

1,694

 1,122

 2,816

Return per share (note 4)

1The Board has agreed to allocate management fees and finance costs 65% to capital and 35% to revenue.

1.85p

1.22p

3.07p

 

STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM INCORPORATION ON 19th DECEMBER 2017 TO 31st AUGUST 2018

 

Called up

 

 

 

 

 

 

share

Share

Special

Capital

Revenue

 

 

capital

premium

reserve1

reserves1

reserve1

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Period ended 31st August 2018 (Unaudited)

 

 

 

 

 

 

At 19th December 2017

 -

 -

 -

 -

 -

 -

Issue of ordinary shares at launch

 931

 92,184

 -

 -

 -

93,115

Fund launch expenses

 -

 (683)

 -

 -

 -

(683)

Redesignation of share premium reserve

 -

(91,496)

91,496

-

-

-

Repurchase of shares into Treasury

-

-

(5,497)

-

-

(5,497)

Net return for the period

 -

 -

-

1,122

1,694

2,816

Distributions paid in the period (note 5)

 -

 -

-

 -

(929)

(929)

At 31st August 2018

931

5

85,999

1,122

765

88,822

 

1 These reserves form the distributable reserves of the Company and may be used to fund distributions to investors via distribution payments.

 

 

 

 

 

STATEMENT OF FINANCIAL POSITION

AS AT 31ST AUGUST 2018

 

(Unaudited)

 

31st August 2018

 

£'000

Fixed assets

 

Investments held at fair value through profit or loss

 85,652

Current assets

 

Derivative financial assets

 818

Debtors

 304

Cash and short term deposits

 2,373

 

 3,495

Current liabilities

 

Creditors: amounts falling due within one year

 (140)

Derivative financial liabilities

 (185)

Net current assets

 3,170

Total assets less current liabilities

 88,822

Net assets

 88,822

 

 

Capital and reserves

 

Called up share capital

931

Share premium

5

Special reserve

85,999

Capital reserves

1,122

Revenue reserve

765

Total shareholders' funds

 88,822

Net asset value per share (note 6)

101.7p

 

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM INCORPORATION ON 19th DECEMBER 2017 TO 31st AUGUST 2018

 

(Unaudited)

 

Period Ended

 

31st August 2018

 

£'000

Net cash outflow from operations before distributions and interest

 (36)

Dividends received

 1,262

Interest received

 428

Overseas tax recovered

 4

Interest paid

 (3)

Net cash inflow from operating activities

 1,655

 

 

Purchases of investments and derivatives

(118,126)

Sales of investments and derivatives

36,461

Settlement of foreign currency contracts

(3,395)

Settlement of future contracts

(294)

Net cash outflow from investing activities

(85,354)

Issue of ordinary shares at launch

93,115

Fund launch expenses

(720)

Repurchase of shares into Treasury

(5,399)

Dividend distribution

(886)

Interest distribution

(43)

Net cash inflow from financing activities

86,067

Increase in cash and cash equivalents

2,368

 

 

Cash and cash equivalents at start of period

-

Exchange movements

 5

Cash and cash equivalents at end of period

 2,373

Increase in cash and cash equivalents

2,368

 

 

Cash and cash equivalents consist of:

 

Cash and short term deposits

 1,080

Cash held in JPMorgan Sterling Liquidity Fund

 1,293

Total

 2,373

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD FROM INCORPORATION ON 19th DECEMBER 2017 TO 31ST AUGUST 2018

1.       Accounting period

The financial statements cover the period from the date of the incorporation of the Company on 19th December 2017 to 31st August 2018. Dealings in the Company's shares began on 2nd March 2018 and the Company began investing on that date.

 

2.       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.

 

3.       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 2018.

The Board has agreed to allocate management fees and finance costs 65% to capital and 35% to revenue, reflecting the investment objective of the Company.

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

 

4.       Return per share

 

(Unaudited)

 

Period ended

 

31st August 2018

 

£'000

Return per share is based on the following:

 

Revenue return

 1,694

Capital return

 1,122

Total return

 2,816

Weighted average number of shares in issue

 91,775,740

 

 

Revenue return per share

1.85p

Capital return per share

1.22p

Total return per share

3.07p

 

 

 

 

 

5.       Distribution paid

 

(Unaudited)

 

Period ended

 

31st August 2018

 

£'000

First interim distribution of 1.0p1

 929

Total distribution paid in the period

 929

1     1.0p distribution consists of 0.9538p dividend and 0.0462p interest.

Distribution paid in the period has been funded from the revenue reserve.

A second interim distribution of 1.0 pence per ordinary share amounting to £871,614 has been declared payable in respect of the year ending 28th February 2019.

 

6.       Net asset value per share

 

(Unaudited)

 

Period ended

 

31st August 2018

Net assets (£'000)

 88,822

Shares in issue at period end

 87,361,408

Net asset value per share

101.7p

 

 

JPMORGAN FUNDS LIMITED

17th October 2018

 

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.

 

 


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