JP Morgan to merge UK small and mid cap trusts

Enlarged £430m UK Smaller Companies trust will continue to be managed by Georgina Brittain and Katen Patel

Boutique Managers announce £1.7bn merger


JP Morgan has announced plans to merge two of its UK equity trusts.

Subject to shareholder approval, the JP Morgan Mid Cap Investment Trust will merge into the enlarged UK Smaller Companies trust, which will continue to be managed by Georgina Brittain and Katen Patel.

The trust’s board said it believes shareholders will benefit from greater economies of scale resulting from the enlarged asset base, including cost efficiencies.

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The enlarged trust is expected to have net assets in excess of £430m. Following the merger, JPM will reduce the management fee to 55bps above £200m net assets, and 65bps below that threshold.

Ongoing charges will also be dropped 20bps.

While the trust’s investment objective will remain unchanged, the board said it would revise its dividend policy to target a 4% yield on net asset value per year.

Chair Andrew Impey said: “[The] board believes that there is a strong case for long-term investment in UK smaller companies. The valuations are attractive in absolute and relative terms, the outlook remains favourable, despite some near term challenges, and the company provides access to investments in a controlled risk environment that individual investors would find difficult to replicate on their own.”

He added: “The proposed combination with JP Morgan Mid Cap Investment Trust will enhance this opportunity and create a larger, more liquid investment trust but still allow both sets of shareholders to benefit from JP Morgan’s expertise and track record in investing in this exciting area of the UK market. 

“Both boards believe that shareholders will benefit from the reduction in costs, contributing to the good potential for capital growth, and the new enhanced dividend policy, which will allow them to benefit from an attractive yield.”

The UK Smaller Companies trust has returned 37.3% over the last five years, according to FE fundinfo data, placing it in the top quartile of performers in the AIC UK Smaller Companies sector.

In October last year, JP Morgan Elect signed heads of terms to merge into the JPM Global Growth & Income trust.

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