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JP Morgan AM Rolls Out Fund To Capture Dividend Growth In Emerging Economies

Tom Burroughes , Group Editor, London , 8 June 2010


JP Morgan Asset Management intends to launch what it says is the first investment trust focused on dividend income and capital growth from global emerging market companies, drawing on growing interest in dividend income paid by companies in fast-growing young economies.

The trust is called JPMorgan Global Emerging Markets Income and will be managed by Richard Titherington, chief investment officer and the head of the JP Morgan Asset Management emerging markets equity team.

Firms such as Sarasin & Partners and HSBC Private Bank have stressed the importance of owning dividend-paying firms, as they see cash-rich corporates, including those in geographical regions which have traditionally focused more on capital growth, as being more regular dividend payers in future.

“Global emerging markets, which have traditionally been viewed purely as a source of growth for investors, are now maturing into consistent income generators. This is due to emerging market companies adopting an increasingly disciplined approach to both investment and the interests of shareholders, which has been reflected in falling levels of debt and a willingness to pay dividends,” JP Morgan AM said in a statement.

“Even during the very recent economic crisis many have maintained robust payout ratios in excess of 30 per cent. Analysis demonstrates that over the last decade emerging markets outperformed the FTSE 100, whilst higher yielding emerging markets equities have outperformed the broader MSCI Emerging Markets Index over the same period,” it said.

The new trust will seek to deliver a 4 per cent target yield at inception and would look to offer a progressive dividend. The portfolio will aim to have between 50 to 70 holdings in global emerging markets equities. The Company will measure its performance against the MSCI Emerging Markets TR Net Index (sterling).

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