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JPMAM announces intention to launch Brazil Investment Trust

1st March 2010 Print

J.P. Morgan Asset Management, the largest manager of investment trusts in the UK, has announced its intention to launch an investment trust focused on investment in Brazil, to be named the JPMorgan Brazil Investment Trust.

The launch means that investors will be able to access companies exposed to the domestic economy through a London listed investment trust and harness the country's rapidly rising domestic economic growth. The South American power house leads the BRIC acronym and is widely tipped as the growth story of 2010 but historically investment in Brazil has been lower than in other emerging markets.

Why Brazil:

Brazil is the tenth largest economy in the World with an economy driven by consumption, which accounts for over 60% of Brazil's USD 1.5 trillion GDP. J.P. Morgan Asset Management believes the more stable business cycle and lower interest rates experienced recently will significantly encourage domestic investment supported by the 2014 World Cup and 2016 Olympics. This will result in a combination of increased productivity and growth.

Why now:

The launch comes as Brazil has passed the ultimate stress test of the global slowdown and proved its ability to recover from turbulence both domestic and global. The country is now enjoying the ability to pursue counter cyclical polices which puts it in a stronger position than other highly cyclical emerging markets.

Using a bottom up stock selection strategy the investment managers, Sebastian Luparia and Luis Carrillo, will focus on investing in stocks that capitalise on Brazil's rising public and private sector investments which are driving economic growth.

Sebastian Luparia, manager of the JPMorgan Brazil Investment Trust, said "Brazil is a very exciting investment opportunity and since it achieved investment grade in April 2008 it has transformed from inflationary boom-bust cycles. 2009 stress tested this when the country experienced a normal recession with a swift recovery. The investment opportunities we are finding in the region are focused on the domestic growth of the economy and we are selecting opportunities with a two to three year investment horizon so as to capitalise on investing in this growth."

David Barron, Head of Investment Trusts at J.P. Morgan Asset Management, said, "The investment trust structure is ideally suited to investment in emerging markets. We are delighted at the prospect of adding a Brazil investment trust to the very successful single country investment trusts we manage, investing in Russia, India and China. We think Brazil offers some compelling opportunities for investors with a higher risk tolerance."

David Barron went on to say, "The core driver of portfolio growth would be in domestic growth stocks. As a result the fixed capital structure of an investment trust is ideal."

The JPMorgan Brazil Investment Trust will have a target size of GBP 50 million and will predominantly target private investors and advisers. The portfolio would aim to have 25 to 50 holdings and there would be no hedging of currency exposure and the portfolio will diverge substantially from the benchmark constituents. The Company will measure its performance against the MSCI Brazil 10/40 Index.

In addition to subscribing to ordinary shares at launch the investment trust will also offer investors a bonus issue of subscription shares, on a one for five basis.

Investors can register at jpmbrazil.co.uk to receive further information when available.