By Elliot Gulliver-Needham
JP Morgan Asset Management is set to merge its the Multi-Asset Growth & Income trust (MATE) into its Global Growth & Income trust (JGGI), due to MATE’s small size.
In a stock exchange notice today, the two trusts said MATE would be folded into JGGI, creating the largest investment trust in the global equity income space at £2.2bn in assets.
MATE chair Sarah MacAuley explained that the £69m trust had reduced its appeal to investors, adding that “unfortunately, size does matter due to the implications for costs and for the liquidity of MATE’s shares”.
Following the planned merger, the trust said that costs would be cut, with its ongoing expense ratio reducing from 1.1 per cent to 0.5 per cent annually.
The scale of the enlarged trust should also “improve secondary market liquidity for its shareholders and result in cost efficiencies”, its board added.
In addition, JGGI’s shares currently trade on a 0.8 per cent premium compared to MATE’s 3.6 per cent discount.
Both boards unanimously recommended the merger, noting that the trusts already have a 50 per cent overlap in their portfolios.
Investors will receive documentation by the end of next month with votes scheduled for shareholders in March.
Emma Bird, head of investment trusts research at Winterflood, noted that “this was the third merger since the beginning of 2022 for which JGGI has acted as the rollover vehicle, and the second involving another JPMorgan-managed fund.”
She said that the smallsize of MATE meant that the merger “makes sense” and was not surprised to see more corporate activity amongst smaller funds, as the trend of consolidation has continued to spread across the sector.
Numis analysts Ewan Lovett-Turner and Ash Nandi added that JGGI was “in a strong position to act as a consolidator, after a period of outperformance for the trust “that has helped it build its reputation with retail investors – demonstrated by regularly featuring on the most bought lists of retail investors”.
