JP Morgan Fleming Asset Management (JPMF) is to launch a closed ended global growth vehicle offering...
JP Morgan Fleming Asset Management (JPMF) is to launch a closed ended global growth vehicle offering full capital protection to UK investors, writes David Griffiths.
The product, which has yet to be named, will be domiciled in Dublin and linked to an underlying basket of existing actively managed JPMF funds.
The funds, which will make up the basket, are the JPMF Premier Equity Growth fund; Japan Growth; SE Asia Growth; US Growth and the Global Fixed Income fund. Some 70% of assets will be in growth, with 30% income to provide a balanced portfolio. Different weightings will be given to each of the underlying funds, with the weightings altered according to market conditions. At launch, assets will initially be heavily weighted towards the Premier Equity Growth and the Global Fixed Income funds.
The derivatives-linked vehicle will offer investors a full return of capital plus a large proportion of the upside in the underlying portfolio. The exact level is still to be finalised, although JPMF has indicated that it is likely to be up to 80%. It will consist of one class of share and be both Isable and Pepable. The minimum investment is to be £3,000, although there will be no maximum.
The closed end investment company will launch on the 15 October subject to FSA approval. It is to have a five year life and be available during a six week offer period.
The vehicle is to operate on a total return basis. All dividends from the income portion of product will be rolled up, with upside returns calculated upon maturity.
Although the shares will not be able to be sold back to JPMF, the investment banking arm of the group will make a market for them, however, investors will only be able to sell shares on a quarterly basis.
JPMF will not be underwriting the costs of this product as it is underwritten by derivatives. The group will look to limit the size of the offering to around £200m.
The product is to be marketed both through the intermediary channel and directly to JPMF's existing client base. Intermediaries will be offered a choice of commission structures. One option would be to receive up-front commission of 3.5%, or alternatively 1% plus 0.5% trail.
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