Two JPMorgan emerging market investment trusts with similar names offer markedly different strategies, analysts at Canaccord Genuity said as they initiated coverage.
The broker compared JPMorgan Emerging Markets Growth & Income (LON:JMGI) and JPMorgan Emerging Markets Dividend Income (LON:JEMI), highlighting contrasts in portfolio structure, dividend approach and investment focus.
JMGI has adopted an enhanced dividend policy, paying 4% of net asset value annually, with around half funded from capital rather than income. This allows the portfolio to retain a growth bias, including a higher weighting to technology stocks.
By contrast, JEMI focuses on generating income naturally, with a more diversified portfolio and higher yield.
Canaccord analyst Iain Scouller noted that JMGI holds fewer stocks with a more concentrated top ten, while JEMI spreads risk across a broader range of holdings.
Performance has been broadly similar over the medium term, though JMGI’s growth tilt has led to more volatility in recent month.
Both trade at around a 7% discount to NAV, and even with the enhanced dividend policy, JMGI’s dividend yield of 3.1% matches JEMI’s.
The analyst said: "We think the key differentiator is whether investors want a portfolio with a greater growth tilt and around half the dividend paid being financed from capital ie JMGI; or a portfolio that generates natural income from a more diversified portfolio i.e. JEMI."
Canaccord's current preference is for the growth focus provided by JMGI, leading to an initiation with a 'buy' rating, while JEMI gets a 'hold'.