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(Alliance News) - JPMorgan Global Core Real Assets Ltd on Friday reported a drop in assets in its inaugural results.
At February 29, the trust's NAV per share stood at 96.8 pence, down from 99.0p at September 24, 2019, when the trust completed its initial public offering in London.
The trust's net assets rose to GBP194.4 million from GBP147.5 million at the time of its IPO. The trust's shares in issue rose to 200.8 million from 149.0 million.
The trust declared an interim dividend of 0.75p in the period.
As a result, the trust's NAV total return was negative 1.5%.
JPMorgan Asset Management's Alternative Solutions Group, the trust's manager, said the company's portfolio was predominantly cash during the period.
"The main driver of this negative return was sterling's appreciation versus most major currencies following a decisive General Election result shortly after the company's IPO," the manager said.
The manager added: "Of particular note was that, between launch and the company's year-end, sterling strengthened by 3.2% against the US dollar and by 2.7% against the euro, creating a foreign exchange loss. As a reminder, the company's portfolio is unhedged and therefore, when allocating overseas (at year end 97.4% of JARA's exposure was non-sterling), FX risk is present. Historically, FX gains/losses have tended to cancel themselves out as they 'revert to mean' over time. Given this historical precedence; the structural risk that hedging illiquid assets can bring and the impact the cost of hedging can have on income, the decision not to hedge FX exposure was taken at IPO alongside discussion with key shareholders."
At the end of the period about 40% of the trust's initial IPO proceeds had been invested into its listed real assets strategies and its private US real estate strategy.
Shares in JPMorgan Global Core Real Assets were trading flat in London on Friday at 109.24 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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