JPMorgan Emerging Markets (JMG ) has dropped its fees ahead of a continuation vote as its total underlying return was flat for the 12 months to the end of June.

The £1.1bn trust managed to stay ahead of its MSCI Emerging Markets benchmark in the year to end of June, with total return to shareholders of 0.8% including dividend payments, while the index fell 2.8%. JMG had a total dividend of 1.65p for the year, a 22% increase from the previous year. 

Shareholders will also see more of their money preserved by the fund as it has announced a cut to fees, with charges now calculated on a tiered basis of 0.75% a year on the first £500m of assets, 0.65% between £500m and £1bn, and 0.6% in excess of £1bn. This compares to the 0.75% flat fee arrangement that was in place.

Trust chair Andrew Lisser said the arrangement ‘remains extremely competitive with other comparable managed investment companies and similar savings products’.

The fee cut may help keep shareholders onside ahead of the continuation vote at the annual general meeting in November this year, with Lisser stating that ‘given the long-term performance returns, your board has no hesitation in recommending to shareholders that they vote in favour of the company continuing as an investment trust for a further three-year period’.

The board has also tried to keep shareholders happy by trying to tackle the discount, which narrowed slightly during the year from 10.3% to 9.7%. It bought back £21.2m worth of shares in the year, which added 0.2% to performance and continues to monitor the discount and market conditions ‘on at least a weekly basis’ with a further 3m of shares bought since June. 

Portfolio positioning 

Trust manager Austin Forey said ‘emerging markets have not had a vintage year’ but he still managed to ‘maintain value’ in the portfolio.

He said the declines in the Chinese market, which has struggled to maintain a post-Covid recovery, have ‘masked and offset the fact that many emerging markets delivered healthy positive gains over the year’.

Despite caution around the wider Chinese market the country was the largest signle contributor to the year’s outperformance and Forey has added marginally to some of his Chinese holdings including distillery Moutai, internet company Netease, and electrical appliances manufacturer Midea.

‘In any economy the best companies can still create value for shareholders, and we have seen before that tough economic environments can often increase the value of competitive advantage,’ he said.

The manager pointed to restaurant business Yum China as a proof point. The business ‘increased noticeably in value’ throughout the year as it was able to improve its proposition while its competitors were unable to invest.