JPMorgan has overhauled the team running its underperforming Indian (JII ) investment trust, recruiting Sandip Patodia from Fundsmith and saying goodbye to Raj Nair, its co-manager for 17 years.

Patodia, assistant manager of the underperforming Fundsmith Emerging Equities Trust (FEET ), joined JPMorgan this month ahead of the shock announcement that the emerging markets closed-end fund would liquidate after Terry Smith’s Fundsmith said it would resign as manager of the £323m investment trust.

Patodia (pictured above), a specialist in India, which accounted for 45% of FEET’s portfolio, becomes one of three co-managers of £668m JPMorgan Indian.

Amit Mehta, a global emerging markets fund manager who has worked at JPMorgan for 11 years, also moves across to work on the investment trust with Ayaz Ebrahim, who also co-manages JPMorgan Asia Growth and Income (JAGI ).

The departure of Nair represents a changing of the guard for a trust that trails the MSCI India index over one, three, five and ten years.

Ebrahim became co-manager two years ago when Rukhshad Shroff, the manager who had helped launch the trust 26 years earlier, retired after the Covid pandemic struck world stock markets.

JII’s board thanked Nair (below) for his contribution and said it looked forward to working with the team to deliver strong long-term returns to shareholders. It added there would be no change in the quality growth stock-picking process. 

The three managers face immediate pressure to improve performance to ensure the trust passes the next five-year shareholder continuation vote in January 2024.

After that, the next challenge is to help the trust avoid shrinking in another 25% tender offer in three years time.

The company, which is 28% held by leading discount hunter City of London Investment Management, announced in January last year that it would buy back up to a quarter of its shares at close to asset value if it did not beat its benchmark by 0.5% a year in the five years to October 2025. 

While that might not sound too difficult, it is a stretch for a fund that has grown its net asset value (NAV) by 161% over 10 years, behind the 206% total return from the MSCI India index.

Over five years a 35.6% return on net assets looks poor against the benchmark’s 79.45 total return. The shares trade at a 20% discount below NAV.

The trust held a 25% tender in January 2000 when it failed to outperform in the previous three years.

Analysts at Numis Secuirites, the corporate broker, said performance had suffered being positioned for a cyclical recovery when the pandemic struck in early 2020. A large underweight position in energy company Reliance Industries had also held back returns.