Fund of funds trust offers straight forward investment trust access
Investment advisers looking to gain access to a range of investment trusts should look to JPMorgan Elect Managed Growth, according to David Barron, Head of Investment Trusts at J.P. Morgan Asset Management.
Commenting on the impact of the forthcoming Retail Distribution Review, Barron said that independent advisers will need to look to include investment trusts in the range of funds they have to consider in order to meet independence status. He explained that getting ‘up to speed' with all available investment trusts could take time and that one solution could be to go down the fund of funds route within an investment trust structure.
David Barron said, "An investment trust fund of funds can offer advisers access to carefully selected investment trusts by an experienced manager and combine the positive aspects of choosing funds with the benefits of investing in closed ended funds. This is an option for advisors who understand the benefits of investment trusts but lack the time to research them in depth."
One of the benefits of such an option is highlighted by the manager of JPMorgan Elect Managed Growth, Katy Thorneycroft, who says she finds excellent investment opportunities through investing in investment trusts trading at a discount. She explains that given the fixed pool of capital she has the flexibility to then hold these trusts until the discount narrows.
Katy Thorneycroft said taking advantage of discounts in the investment trust universe is one of the three main considerations when looking for investment ideas. Also analysed is regional asset allocation, ensuring the portfolio is well diversified and capturing the best opportunities, and fund selection which encompasses extensive due diligence. She says this research makes sure the best investments are selected and ensure the fund delivers continues outperformance against the benchmark.
JPMorgan Elect Managed Growth, a global equity portfolio, offers access to investment trusts and other pooled funds in an investment trust. The investment trust mainly accesses J.P. Morgan Asset Management funds, but also uses external managers to benefit from a further range of investment approaches.
As of May 2011 the portfolio is split to be 26% invested in third party investment trusts and 74% invested in J.P. Morgan Asset Management managed investment trusts and open-ended funds, of which 17% are currently invested in JP Morgan open- ended funds.
David Barron concluded, "Although RDR does not come into place until 2013, advisers are preparing themselves for the many changes they may need to make and as a group we are striving to help them transition as smoothly as possible. A trust such as JPMorgan Elect Managed Growth can be a compelling alternative to many other multi-manager solutions."
The JPMorgan Elect Managed Growth shares have appreciated 18.83% over the last 3 years to 31 May 2011. The NAV appreciated 18.12% while the benchmark, 50% FTSE All-Share Index and 50% FTSE World Index (ex UK) (£), appreciated 9.24%. The total expense ratio (TER) of the investment trust is 0.49%.