Investors are bearish on emerging markets for reasons including rising interest rates in the US, and escalating trade tensions between the US and China. This has been detrimental to the share prices of some investment trusts that invest in this area, such as JPMorgan Global Emerging Markets Income Trust (JEMI), regardless of how their assets are performing. This trust’s cumulative share price returns also don’t look good when compared with MSCI Emerging Markets index.
Relatively wide discount to NAV
Attractive income
Good long-term NAV performance
Aims for sustainable income and growth
Emerging markets risk
Adverse currency movements
But its net asset value (NAV) return over one year is ahead of MSCI Emerging Markets index. This means it was trading on a discount of 5.2 per cent as of close on 20 November. In the past it has traded at tighter levels and at times a premium to NAV, and in most calendar years since its launch in 2010 its NAV returns have been ahead of the benchmark, with the exception of 2015 and 2017. It lagged last year because it doesn’t invest in low-yielding internet and technology stocks such as Tencent (HK:700) and Alibaba (US:BABA), which offer little or zero yield but made strong share price returns.