Jupiter Emerging and Frontier Income Trust PLC
Update from liquidators
The appointed liquidators to Jupiter Emerging & Frontier Income Trust PLC expect to release an annual report to Shareholders in early August. This update will include details on the remaining distribution and status of the remaining asset liquidations. This document will be made available in the fund changes section of the website.
Payment of 1st Distribution
The first distribution to shareholders of 94 pence per share was made by the Registrar, Link Group, via CREST on 1 August 2022. The relevant date for the distribution is 1 August 2022.
Future Distributions
There is no agreed timescale for the 2nd distribution at present which will be determined by how quickly outstanding matters are concluded. Outstanding matters relate to finalising the sale of the portfolio and receiving funds, settling all outstanding liabilities and submitting outstanding returns to HM Revenue & Customs (‘HMRC’) and receiving tax clearance. HMRC currently have a considerable backlog in dealing with proposing claims and therefore we do not anticipate receiving tax clearance until late 2024 at the earliest.
The 3rd and final distribution will be in respect of the remaining Russian investments held. These are currently held in the Company’s NAV at Nil value. The sale of these investments will be subject to the lifting of the UK government’s current sanctions in respect of Russia. Timing for this is currently unknown.
If you have any questions regarding the liquidation process please contact Gareth Morris or Susan Evans via 0117 203 3700, or [email protected].
Further to the announcement made by the Board of Jupiter Emerging & Frontier Income Trust PLC, the shareholders of the Company approved the voluntary liquidation at the general meeting on 13th June 2022.
Since then, the liquidators have provided the following update.
“With the help of Jupiter the investment portfolio has now largely been realised and the company’s assets are over 97% in GBP cash. We are concluding an assessment of the likely final liability position following which we will set the initial distribution rate. We currently expect to make the first distribution on or around the end of this month, July 2022. The rate of the initial distribution is still uncertain but we currently expect that it will fall in the range of 90-95 pence per share.
If you have any questions regarding the liquidation process please contact Gareth Morris or Susan Evans via 0117 203 3700, or [email protected]. “
Link to historic JEFI stock market announcements.
Further to the Company’s announcement on 24 February 2022, the Board has concluded that it would be in the best interests of the Company and shareholders as a whole to put forward proposals for the members’ voluntary liquidation of the Company. The Board is conscious of the current size of the Company, the risk of further shrinkage through redemptions and the limited opportunities for growth against the backdrop of a deteriorating international outlook. The recent invasion of Ukraine has only served to reinforce the Board’s reservations.
In addition, further to the Company’s announcement on 8 March 2022, the Company has served protective notice of termination on the Company’s AIFM, Jupiter Unit Trust Managers Limited (“JUTML”), in accordance with the investment management agreement between the Company and JUTML.
As part of these proposals, the Board is considering a scheme of reconstruction which, in addition to a full cash exit less costs, would include an optional rollover of the Company’s assets into another vehicle. A further announcement will be made in due course.
The Board is working on formal proposals to put to shareholders in the coming weeks and it is envisaged that, in addition to offering a full cash exit less costs, an option will be proposed to allow shareholders the opportunity to rollover into another vehicle through a scheme of reconstruction of the Company. To this end, conversations regarding potential rollover vehicles are taking place with a number of investment management houses, including Jupiter.
Since launch in 2017, the Company’s Investment Adviser has been Jupiter Asset Management Limited, led by fund manager Ross Teverson. The Board has been informed that Ross has decided to leave Jupiter with effect from 31 March 2022. Matthew Piggott, who has worked alongside Ross in Jupiter’s Global Emerging Markets team for five years and who has been involved in the investment management of the Company’s portfolio for the last two years, will assume lead fund management responsibility from that date.
John Scott, Chairman of JEFIT, commented: “Ross Teverson’s investment record at JEFIT has been strong and at all stages he has enjoyed the Board’s full confidence. The decision to wind up the Company was driven by the steady shrinkage of the net assets through its annual redemption facility, which has resulted in a trust which, in the opinion of the Directors, has fallen below the minimum desirable size for a fund of this kind and which in current market conditions will be difficult to grow to an acceptable level.
“The Board of JEFIT would therefore like to thank Ross for what he has achieved over the past five years in very challenging conditions and to wish him every success in the next phase of his career.”
A further announcement will be made in due course.
Jupiter Emerging & Frontier Investment Trust – AGM
In light of the fact that we are holding an open meeting but recognise some shareholders might be reluctant to travel, we are pleased to be able to provide a facility for shareholders to follow the AGM remotely and submit questions to the board on the business of the meeting.
How to join the virtual meeting
You will need to visit https://webcast.openbriefing.com/jupiter-agm22/ using your smartphone, tablet or computer. You will then be prompted to enter your unique 11 digit Investor Code (IVC) including any leading zeros and ‘PIN’. Your PIN is the last 4 digits of your IVC. This will authenticate you as a shareholder.
Your IVC can be found on your share certificate, or Signal Shares users (www.signalshares.com) will find this under ‘Manage your account’ when logged in to the Signal Shares portal. You can also obtain this by contacting Link, our Registrar, by calling +44 (0) 371 277 1020*
Access to the AGM will be available from 30 mins before start of event although you will not be able to submit questions until the meeting is declared open.
If you wish to appoint a proxy other than the Chair of the meeting and for them to attend the virtual meeting on your behalf, please submit your proxy appointment in the usual way before contacting Link Group on +44 (0) 371 277 1020* in order to obtain their IVC and PIN. It is suggested that you do this as soon as possible and at least 48 hours (excluding non-business days) before the meeting.
If your shares are held within a nominee and you wish to attend the electronic meeting, you will need to contact your nominee as soon as possible. Your nominee will need to present a corporate letter of representation to Link Group, our registrar, as soon as possible and at least 72 hours (excluding non-business days) before the meeting, in order that they can obtain for you your unique IVC and PIN to enable you to attend the electronic meeting.
*Lines are open from 9.00 a.m. to 5.30 p.m. Monday to Friday, calls are charged at the standard geographic rate and will vary by provider. Calls outside the UK will be charged at the applicable international rate.
Portfolio Manager Ross Teverson provides an update on the Jupiter Emerging & Frontier Income Trust PLC.
Overview
Please bear in mind that all investments involve risk and the value of, and any potential income from, your investment may fluctuate and are not guaranteed.
Key fund facts
The Jupiter Emerging & Frontier Income Trust PLC (the “Company”) is an investment trust that is listed on the London Stock Exchange.
The company’s investment objective is to achieve capital growth and income, over the long term, through investing predominantly in companies exposed directly or indirectly to emerging and frontier markets worldwide. Its fund manager is Ross Teverson, who is Jupiter’s Head of Strategy, Emerging Markets.
Investment policy
The Company may invest up to 25% of its total assets in companies that, at the time of investment, have their registered offices or principal places of business in, or which exercise a material part of their economic activities in, frontier markets.
The Company may invest up to 5% of its total assets in unlisted companies, calculated at the time of investment.
The Company will invest no more than 10% of its total assets in any single holding, calculated at the time of investment.
The Company’s portfolio is expected to be diversified across a number of geographical areas and, whilst there are no specific limits placed on exposure to any one geographical area, the investment manager will at all times manage the portfolio in a manner consistent with spreading investment risk.
Once fully invested, it is expected that the Company’s portfolio will comprise approximately 40 to 45 investments. The Company does not expect to take controlling interests in investee companies.
The Company will not be restricted to investing in constituent companies of the benchmark, the MSCI Emerging Markets Index.
‘Emerging Market’ means a constituent country of the benchmark, the MSCI Emerging Markets Index. As at 31 March 2017 the constituent countries of the benchmark, MSCI Emerging Markets Index were: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates.
‘Frontier Market’ means each country that is not a constituent of either the MSCI Emerging Markets Index or the MSCI Developed Markets Index. Generally, the fund manager considers frontier markets to be less well established economies that are at an earlier stage of economic and political development than emerging markets. Examples of countries that the fund manager currently considers to be frontier markets are Vietnam and Nigeria.
The Company may, in pursuance of the investment objective:
- invest in equity and equity-related securities (including quoted preference shares, quoted convertible unsecured loan stock, quoted warrants and other similar securities);
- hedge against directional risk using index futures and/or cash;
- hold bonds and warrants on transferable securities;
- utilise options and futures for hedging purposes and for efficient portfolio management;
- enter into contracts for differences;
- use forward currency contracts;
- hold participation notes;
- and hold liquid assets.
Notwithstanding the above, the Company does not intend to utilise derivatives or other financial instruments to take short positions, nor to increase the Company’s gearing in excess of the limit set out in the borrowing policy.
It is expected that the Company’s investments will predominantly be exposed to non-sterling currencies in terms of their revenues and profits. The base currency of the Company is sterling and it will pay any dividends to shareholders in sterling, which creates a potential currency exposure. Whilst the Company retains the flexibility to do so, it is expected in the normal course that this potential currency exposure will not be hedged using any sort of foreign currency transactions, forward transactions or derivative instruments.
No material change will be made to the investment policy without the approval of shareholders by ordinary resolution.
Borrowing policy
The Company may deploy gearing of up to 20% of Net Asset Value, calculated at the time of borrowing, to seek to enhance long-term capital growth and income returns and for the purpose of capital flexibility. The Company’s gearing is expected to primarily comprise bank borrowings but may include the use of derivative instruments and such other methods as the Company’s board of directors may deem appropriate.
Focusing on change
Jupiter Emerging and Frontier Income Trust PLC focuses on investing in companies that are undergoing positive change that has not yet been appreciated by the market, as portfolio manager Ross Teverson believes this will give him an edge in identifying attractive long term investments for the Company’s investors.
Ross looks beyond the traditional emerging markets to identify investment opportunities in ‘frontier markets’. Nascent change is often especially unappreciated in these smaller and less-developed stock markets, which are off the radar of many investors, creating further opportunities to find overlooked investment opportunities. This change can be categorised into three key types:
- Structural change: long-term change at a regional and/or global level.
- Industry change: fundamental change in the nature or behaviour of a specific industry.
- Company change: change driven from within a company.
The market is often slow to recognise burgeoning change in companies for various reasons. These key persistent market characteristics include short-termism, inadequate analysis, the tendency amongst institutional investors to limit their investments to familiar, widely held stocks, and investors becoming fixated on historical share prices, valuations or perceptions of a company. By seeking to avoid these pitfalls themselves, Ross aims to deliver long term returns for the Company’s investors.
Key literature
Performance report
Announcements
Management Style
Ross is Jupiter’s Head of Strategy, Emerging Markets, and has substantial experience across emerging and frontier market equity investing from both regional and sector perspectives.
The Company will invest in holdings that, in the fund manager’s opinion, are undergoing positive change that is underappreciated by the market. The philosophy is based on the observation that there are a number of persistent market characteristics, which means that the market is often slow to recognise change in companies.
Key persistent market characteristics include:
- Anchoring: the tendency amongst investors to fixate on historical share prices, valuations and perceptions of a company.
- Institutional inertia: the tendency amongst institutional investors to limit their investments to familiar, widely held stocks and, as a consequence overlook other investment opportunities.
- Short-termism: the tendency of investors to focus on short-term news flow or data points and, as a consequence, fail to identify longer-term positive change for a company.
- Inadequacies of the analysis from other companies that produce their own company research (e.g. investment banks), as their interests are not necessarily aligned with those of investors.
The above characteristics create opportunities to profit from underappreciated positive change. This change can be categorised into three key types:
- Structural change: long-term change at a regional and/or global level.
- Industry change: fundamental change in the nature or behaviour of a specific industry.
- Company change: change driven from within a company.
The team starts with a broad investment universe. From this, potentially investable companies will be identified by country visits, use of proprietary statistical analysis on companies, analysis of industry/structural changes and collaboration with other teams at the investment manager. Once a company is identified as being of potential interest, a sector specialist will typically research the firm, communicate with the company directly, and present an investment recommendation. The investment recommendation focuses on what is changing for a company, what is currently priced into the stock, and the identification of catalysts which could lead to outperformance of the company’s share price.
Portfolio Construction
Portfolio construction is primarily driven by where the investment manager identifies the most attractive opportunities, but there is also a risk management overlay to minimise unintended macroeconomic positions that could otherwise arise as a consequence of an entirely company-specific research process. While the portfolio will only typically have 40-45 holdings, the investment manager will target a diversified exposure with respect to market capitalisation, geography and sector. Risk is also managed via limiting position sizes to a typical range of approximately 1%-5% of the market capitalisation of each investee company and limiting any single holding to no more than 10% of its total assets (calculated at the time of investment). The maximum frontier markets exposure for the Company will be 25% of its total assets (calculated at the time of investment) and gearing will not exceed 20% of Net Asset Value (calculated at the time of borrowing).
3rd party sources info
Third party sources of information on the Company
Research:
Quoted Data – Investment Research
Data:
JUPITER EMERGING & FRONTIER INCOME TRUST PLC JEFI Stock | London Stock Exchange
FE investegate – Recent Regulatory News Announcements to the London Stock Exchange for Jupiter Green Investment Trust PLC
The Association of Investment Companies
Morningstar – Investment Trusts – Prices, Performance, Education, Research.
How to buy:
Hargreaves Lansdown – Pricing and analysis for Jupiter Green Investment Trust PLC
Interactive Investor – Comment and analysis
These links are provided for your convenience and Jupiter accepts no responsibility for the content of such websites.
Dividend installment plan
Dividend Reinvestment Plan
Shareholders may elect for the company’s registrar, Link Asset Services, to reinvest dividends automatically on their behalf.
Dividend Reinvestment Plan Terms and Conditions are available upon request via the Link Shareholder Helpline on 0371 664 0381* (Overseas +44 (0) 371 664 0381*), by email to [email protected] or through www.signalshares.com**.
Signal shares also allows you to manage your shareholding online. If you are a direct investor you can view your shareholding, change the way the registrar communicates with you or the way you receive your dividends, and buy and sell shares. If you haven’t used this service before, all you need to do is enter the name of the company and register your account. You’ll need your Investor code (IVC) printed on your share certificate in order to register.
*Calls to this number are charged at the standard geographical rate and will vary by provider. Calls outside of the United Kingdom will be charged at the applicable international rate. Lines are open from 09.00 – 17.30 Monday to Friday. 3rd party calls may be recorded.
**Links are provided for your convenience and Jupiter accepts no responsibility for the content of such websites.
Results for the six months ended 31 March 2021
- Share price total return of 26.9% and Net Asset Value (“NAV”) total return of 23.9%, compared to 7.7% return for the benchmark, the MSCI Emerging Markets (Total Return) Index in Sterling.
- First quarterly interim dividend of 1p per share was paid on 26 March 2021; second quarterly interim dividend of 1p per share to be paid on 25 June.
- Portfolio’s underweight in China and overweight in Mexico became positive drivers of absolute and relative performance.
- Relative performance bolstered by zero weighting to Alibaba, one of the largest benchmark constituents, as heightened antitrust scrutiny weighed on sentiment.
- Small cap allocation a key performance driver as companies that were disproportionately impacted by H1 2020 sell-off continued to recover.
- Frontier markets lagged the headline MSCI Emerging Markets Index, impacting relative performance due to portfolio’s 15% weighting.
- Three new positions added during the period: two in Egypt – banking group Credit Agricole Egypt (CAE) and dairy products manufacturer Obour along with Taiwanese chip designer, Elan.
“A year ago, I said that this was a time for strong nerves, and in the 12 months that have passed these have been demonstrated by the Company’s Investment Adviser, which has broadly stuck to its guns and adhered to its investment philosophy – with excellent results.
“The past six months have seen a significant swing of investor sentiment in our favour. While investment patterns rotate, a consistent, repeatable investment process underpinned by sound principles tends to deliver superior returns over the long term.
“Happily, we are now seeing good recovery in our revenue account, which should allow us to revert to the progressive dividend policy we intend to offer to shareholders.”
“In a world where the valuations for many asset classes look high relative to history, the opposite continues to hold true for many companies and sectors within emerging and frontier markets, despite the potential for strong long-term growth. As investors continue to look past the impact of the pandemic, we expect that the scope for operational recovery and rerating from attractive valuations will be positive for stock performance.”
During the six months, the Investment Adviser, Jupiter, committed to achieving net zero emissions by 2050 across its full range of investments and operations, including the Company, reflecting the need to limit global warming to less than 1.5 degrees Centigrade in line with the Paris Agreement. Jupiter has also aligned its strategy, purpose and principles with the UN Global Compact.
The full results announcement can be found in the RNS, while the full Half Yearly Financial Report can be found in our Document Library.
Latest Insights
Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested.
We recommend you discuss any investment decisions with a financial adviser, particularly if you are unsure whether an investment is suitable. Jupiter is unable to provide investment advice.
Investment trust companies are traded on the London stock exchange, therefore the ability to buy or sell shares will be dependent on their market price, which may be at a premium or discount to their net asset value.
Jupiter Emerging and Frontier Income Trust
The Jupiter Emerging and Frontier Income Trust can borrow money and use it to invest, also known as ‘gearing’ or ‘leveraging’. The risk with gearing is that when the borrowed money has to be repaid the value of the Company’s investments may not be enough to repay it and any interest and the Company will make a loss. If the value of the Company’s investments falls, any invested borrowings will increase the value of this loss. Investors may get back nothing at all if the fall in value is sufficiently large. The Company invests in developing geographical areas and there is a greater risk of volatility due to political and economic change, fees and expenses tend to be higher than in western markets. These markets are typically less liquid, with trading and settlement systems that are generally less reliable than in developed markets, which may result in large price movements or losses to the Company. The Company invests in smaller companies, which can be less liquid than investments in larger companies and can have fewer resources than larger companies to cope with unexpected adverse events. . As such price fluctuations may have a greater impact on the Company. This Company invests mainly in shares and it is likely to experience fluctuations in price which are larger than Companies that invest only in bonds and/or cash.
Before making an investment decision, please read the PRIIPS Key Information Document which is available from Jupiter on request and at www.jupiteram.com.
Past performance is no guide to the future.
Company examples are for illustrative purposes only and are not a recommendation to buy or sell.
The Company currently conducts its affairs so that its shares can be recommended by Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority’s (FCA) rules in relation to non-mainstream pooled investment products and intends to continue to do so for the foreseeable future. The Company’s shares are excluded from the FCA’s restrictions which apply to non-mainstream pooled investment products because they are shares in an investment trust.
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