Fund platform Hargreaves Lansdown is putting its big guns behind a new fund launch: Newton Emerging Income Fund, which will be managed by Sophia Whitbread and Jason Pidcock (who also run Newton's Asian Income Fund). Jason Pidcock has a good record as manager of Newton's Asian Income Fund. But why invest in a new emerging markets income fund, with all the risks attached to a new launch, when there is a well-established player already in this market?
Our Top 100 fund JPMorgan Global Emerging Markets Income Trust is an investment trust that offers access to dividend-paying stocks in the MSCI Emerging Markets Index. It aims to provide investors with a dividend income combined with the potential for long-term capital growth from investing in a diversified portfolio of emerging markets investments. The trust launched in July 2010. Fund manager Richard Titherington is chief investment officer for JPMorgan's emerging markets business, responsible for managing more than £25bn of emerging markets equities and a team of 40 based in London, New York, Sao Paulo and Moscow.
Newton Emerging Income Fund's estimated ongoing charges are 2.03 per cent. Contrast that with JPMorgan's management fee which is 1 per cent a year of net assets. JPMorgan also charges a performance fee at 10 per cent of any outperformance of the company's NAV over the company's benchmark index, the MSCI Emerging Markets Free Index. This has resulted in the fund's ongoing charge being 1.3 per cent, that's 1 per cent less than the Newton fund's estimated charge.
The Newton fund's estimated dividend yield is 4 per cent while the JPMorgan fund has a proven dividend yield of 4 per cent. Another advantage of the JPMorgan fund is that as it is an investment trust; investors have complete transparency every six months - the JPMorgan fund listed 71 assets in its January 2012 report.
One downside to the JPMorgan fund is that it is trading at a small premium to net asset value of 1 per cent, with its 12-month average premium at 1.87 per cent. This reflects the fact that there are no other specific emerging markets income funds in the investment trusts space, although Utilico Emerging Markets (also a Top 100 Fund) has a decent dividend yield of 3.3 per cent. It invests predominantly in infrastructure, utility and related sectors, mainly in emerging markets. It was shortlisted for Best Emerging Markets Fund in our March 2012 Fund Awards.
If you have a very large portfolio then you could invest a portion in all three funds but, for most investors who are seeking to diversify their income sources, the JPMorgan fund remains our first choice.
For more fund ideas across all asset classes and countries visit our Top 100 Funds.
JPMORGAN GLOBAL EMERGING MARKETS INCOME TRUST (GB00B5ZZY915) | |||
| SIZE OF FUND: | £209.8m | NAV: | 112.5 |
| No OF HOLDINGS: | 71 | PRICE PREMIUM TO NAV: | 1.11% |
| SET UP DATE: | 29 July 2010 | 1-YEAR PRICE/NAV PERFORMANCE: | 16.44%/22.93% |
| MANAGER START DATE: | 29 July 2010 | TOTAL EXPENSE RATIO: | 1.24% |
| PRICE: | 113.75p | YIELD: | 4% |
| GROSS GEARING: | 107 | MORE DETAILS | jpmglobalemergingmarketsincome.co.uk |
Source: Morningstar as at 28/09/12
Top 10 holdings as at 31 August 2012
| Company | Sector | Weight |
| Arcelik | Consumer discretionary | 2.3% |
| Safco | Industrials | 2.3% |
| Bank of China | Financials | 2.2% |
| Lukoil ADR | Energy | 2.1% |
| Companhia de Concessoes Rodoviarias | Industrials | 2.1% |
| Quanta Computer | Information technology | 2.1% |
| Turkiye Petrol Rafinerileri | Energy | 2.0% |
| Mobile Telesystems ADR | Telecommunication services | 2.0% |
| Commercial Bank of Qatar | Financials | 2.0% |
| Phillippine Long Distance Telephone | Telecommunication services | 1.9% |
Geographical breakdown as at 31 August 2012
| Country | Weight |
| Taiwan | 12.0% |
| Brazil | 11.3% |
| South Africa | 8.7% |
| China | 8.3% |
| Hong Kong | 7.4% |
| Turkey | 5.7% |
| Russia | 4.8% |
| Poland | 4.7% |
| Thailand | 4.2% |
| Korea | 4.1% |
| Qatar | 3.6% |
| Malaysia | 2.7% |
| Mexico | 2.5% |
| Saudi Arabia | 2.3% |
| India | 1.5% |
| Other | 10.4% |
| Cash | 5.8% |
