JP Morgan Emerging Markets Investment Trust (JMG)


(Jack) #1

“JPMorgan Emerging Markets Investment Trust plc seeks to uncover quality stocks from across emerging markets that are also attractively valued, benefiting from an extensive network of country and sector specialists from one of the longest established emerging market teams in the industry.”

Quick Facts
Sector Emerging Markets
Manager Austin Forey
Assets £1.20bn
Discount/Premium -8.86%
Ongoing Charge 1.06%

as at 01/03/2019

The Sector
Emerging Markets historically provide greater returns than the market, albeit at the expense of heightening volatility. Valuations are currently much lower than their developed market counterparts, especially in Russia, and China (both with average Price to Book values of < 1). China and Indian make up around 35% of the world’s population and can brag some of the fastest growth GDP. These huge increasingly more affluent markets dwarf the likes of the western economies.

Key catalysts for Emerging Markets will be the end of US-China trade war, and a lower dollar. Key concerns would be a slowdown in global growth and the risk of further rate hikes in the US.

The Trust
Austin Forey has provided returns in excess of the MSCI Emerging Benchmark over his 25 year tenure of the Trust. He follows a tried and tested 3 step process; Find good companies, don’t overpay and hold them for a long time. He looks for competitive companies who can grow their position, and importantly convert that growth into profitability. He is also very focused on companies who have shareholder focused management teams. Austin acknowledges that his style is not always in favour, but has managed to add value over the long term.

As of today, the Trust is trading at a discount of -8.86%. This allows an investor to gain exposure to the underlying companies cheaper than their market value. If the Trust as to wind up, investors would receive the market value (after expenses).

Conclusion
I believe JPMorgan Emerging Markets is a strong option for anyone looking for Emerging Market exposure over the long term and wants to benefit from the potential added value of an active manager. Their annual report provides further information, and market commentary and is a great read for anyone interested in the sector. A

Disclosure: I am long JPMorgan Emerging Markets
*As always DYOR notice applies *


(Rob N) #2

I’m looking to increase my emerging markets exposure this year or so. This looks like a good option with an attractive discount :+1:t3:

I’m being cautious about the timing though, I wonder if Chinese stocks will pull back a bit following the latest recovery. I remember reading this tweet which stuck in my head!


(Jack) #3

I do agree that china is not as attractive as it was at the end of last year. However compared to valuations elsewhere in the world, I see EM as attractive right now.

StarCapital have a useful tool for market valuation: https://www.starcapital.de/en/research/stock-market-valuation/

They haven’t been updated since end of Jan tho.

There is also a paper on there, where they have back tested the metrics chosen. Some good bedtime reading!


#4

Also consider the latest OECD Interim Economic Outlook released 6 March. Slowing growth in trade, ongoing trade tensions, high levels of debt all have implications for EM, details available in the presentation and slide deck at www.oecd.org/economy/outlook/economic-outlook/


(Jack) #5

Interesting presentation - EM is defiantly not an area for people with short term horizons.
Is important to know the risks associated, thanks for the resource.


#6

Agreed, one consideration, for those who have the appetite, would be whether it makes sense to take more regionally focused exposure to EM, eg a tactical approach of going overweight a particularly region or regions.