JPMorgan Global Core Real Assets: an opportunity to invest at net asset value

The new C share issue gives investors the chance to benefit from the fund’s reliable and uncorrelated return without having to pay the 11% premium. 

JPMorgan Global Core Real Assets (LON:JARA) was launched in September 2019 to invest in core real assets that generate a reliable return that is uncorrelated to the wider markets. Its underlying holdings consist of high quality businesses in the global real estate, infrastructure and transport sectors.

The fund invests alongside the broader JPMorgan Asset Management Alternative Solutions Group, which enables it to access a wide range of opportunities that are not available in the listed market. It currently holds around 700 private assets, which make up about 80% of the portfolio, with the balance held in publicly quoted stocks. 

JARA’s target allocations are as follows: global infrastructure (10% to 30%), global transport (10% to 30%), global real estate (30% to 50%) and liquid real assets (10% to 30%). Its largest geographic exposure is the US at 57%, followed by Asia Pacific at 21%, Continental Europe accounts for 16% and the UK three percent, with the remaining three percent in cash and other areas. 

Pipeline of new opportunities 

The fund raised £149m in its September 2019 IPO and invested the full proceeds over the course of the first year, which was in line with expectations. It has consistently traded at a premium to NAV and this has enabled it to raise a further £60m through ongoing issuance. 

JPMorgan’s management team has identified an attractive pipeline of opportunities and is looking to increase the fund’s liquidity to take advantage. They hope that the new C share issue, which is open for applications via your broker until 9^th December, will raise a minimum of £80m. 

The new issue offers a chance for investors to access the portfolio at NAV, without having to pay the 11% premium. It is thought that about 80% of the proceeds will be deployed in six months, with the two share classes merging within a year or when 85% of the cash has been invested, whichever is sooner.

Attractive target return and yield

JARA aims to generate a long-term target annual total return of seven to nine percent including a dividend yield of four to six percent. The performance since launch however has been disappointing with a loss of six percent due to the weakness in the US dollar undermining its large North American allocation, although the dividends were in line with their first year target. It is thought that the pandemic has only had a limited impact.  

The investment trust analysts at Winterflood believe that the fund operates a unique portfolio and that the scale and experience of JPMorgan provides credible assurance that it can deliver a stable income as well as reduced volatility and market correlation. This was put to the test during the March sell-off when it experienced significant share price volatility, but the NAV and underlying investments remained stable and the share price recovered within weeks.

JPMorgan Global Core Real Assets would make a good complementary holding to a UK-focused portfolio, although the high dollar exposure could be a problem if sterling rallies as a result of an orderly resolution of Brexit. If this were the case it would make sense to hedge the currency risk, which you could do via the WisdomTree short USD long GBP (LON:USGB) ETF.