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JPM trust foregoes £1.5 million performance bonus

by Robert St George on Oct 11, 2013 at 15:56

JPM trust foregoes £1.5 million performance bonus

The board of the £311 million JPMorgan Global Emerging Markets Income Trust has revealed that it has waived a performance fee worth £1.5 million for the year ended 31 July 2013.

The fund, managed by Richard Titherington (pictured), has also adjusted how it will pay out such bonuses in the future. Previously performance fees were capped at 0.75% of net assets, but anything above this could be carried forward into future years. Now no excess amounts will be paid in subsequent years.

It was a payment earned in 2012 under this arrangement that the fund’s manager relinquished; a standard performance fee of £597,000 was still paid.

In the year to 31 July 2013, the trust returned 14.7% compared with 5.4% from its benchmark MSCI Emerging Markets index.

Over the same period, though, the MSCI World index returned 27%. Titherington (pictured) acknowledged this ‘significant underperformance of emerging market stocks’, but argued that it had paved the way for them to surge. In particular, he highlighted that for the first time since the crisis years of 2008 and 2009, the MSCI Emerging Markets index traded on less than 1.5 times its book value.

‘Over the past 15 years, instances of such low valuations have been seen almost exclusively during global crises, and the outcome has generally been the same, namely strong performance over the subsequent one and three-year periods,’ said Titherington.

He concluded: ‘While many of the market’s current concerns about the asset class are reasonable, they do not amount to a crisis in our view. We believe strongly that current market pessimism and depressed valuations present an opportunity for long-term investors like ourselves, even if the short-term outlook is somewhat less clear.’

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