It has been a rough couple of years for shareholders in long-duration assets as rising interest rates have sent them to deep NAV (net asset value) discounts.
With central banks signaling the end of the rate-hiking cycle and inflation heading back down, former headwinds are now set to turn into tailwinds.
A great way to play this scenario and take advantage of depressed valuations is via JPMorgan Global Core Real Assets (JARA).
The company provides exposure to over 1,400 quality real assets around the world, providing strong diversification alongside reliable income and growth.
The trust’s goal is to provide a total NAV return of between 7% and 9% a year with 4% to 6% coming from dividends.
The share price trades at a 20% discount to the underlying assets, meaning it has already narrowed from the 27% discount seen at the start of the year. This has been aided by the manager conducting a share buyback programme equivalent to around 4% of the outstanding shares over the last year, adding 1.07p to net asset value.
The trust utilises JP Morgan’s extensive alternative asset platform which manages around $200 billion of assets, primarily for institutional clients.
JARA is a unique vehicle providing access to a cornerstone real assets investment strategy allowing retail investors to benefit from the manager’s global scale and expertise.
Over the year to the end of February, the fund’s exposure to real estate has declined from 47% to 42%, driven partly by negative performance from the private real estate equity sleeve as well as active rebalancing.
JARA’s transportation allocation has increased to 23% from 22% and the portfolio’s infrastructure allocation has increased to 24% from 21% while other real assets make up the remaining portion of the fund.
The board believes there is further scope to reduce exposure to real estate and is seeking shareholder approval to change the mandate to give the manager greater flexibility. The company is also proposing to change the frequency of the continuation vote to every three years from five years.
Assuming shareholders vote in favour at the upcoming continuation vote at the annual general meeting on 3 September, the next vote would be held in 2027.
Over the last year, NAV total return was -4.4% and shareholder total return was -20.9% due to the widening of the discount to NAV. Underlying asset performance in local currency was a gain of 0.3%, while total dividends were increased by 5% to 4.2p per share. The historic yield is 4.5%. The ongoing charge is 1.22% a year.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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