JPMorgan Global Growth & Income proposes merger with rival

JPMorgan Global Growth & Income (LSE:JGGI) and Henderson International Income (LSE:HINT) have proposed a merger.

If given the green light by shareholders, Henderson International Income’s assets (currently around £390 million) will be rolled into JPMorgan Global Growth & Income.

The current fund managers and investment objective of JPMorgan Global Growth & Income will remain the same.

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JGGI’s dividend policy will also remain in place. It makes quarterly distributions with the intention of paying dividends totalling at least 4% a year.

The boards of both investment trusts said that a merger will result in “substantial benefits” for both sets of shareholders.

It was pointed out that JGGI has been the stronger performer over multiple periods. In addition, given that HINT is trading on a discount of around -11% and JGGI is trading on a premium of 2.1%, a merger would result in an immediate uplift for HINT’s shareholders.

Fund charges would decrease for HINT’s shareholders, from 0.77% to 0.42%.

General meetings, during which shareholders will vote on the proposals, are expected to take place in April or May. If approved, the merger is expected to take effect by July.

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Richard Hills, chair of Henderson International Income Trust, said a number of its largest shareholders have indicated their support for the proposals.

He added: “The board is delighted to propose the combination of Henderson International Income Trust and JPMorgan Global Growth & Income. The board believes that the proposed combination will provide shareholders with access to a larger, more liquid vehicle with an outstanding track record and a history of growing dividends while focusing on the most attractive investment opportunities. The combination will create a vehicle of significant scale with a highly competitive management fee.”

The proposed merger is part of a trend in investment trust consolidation. In 2024, investment trust mergers hit a record yearly high, with the most prominent combination seeing Alliance Trust and Witan join forces to create Alliance Witan (LSE:ALW).

Investment trust boards are becoming more size-conscious. Ultimately, the bigger an investment trust, the greater the chance of higher demand due to the likelihood of it being on the radar of both retail investors and wealth managers. 

For a wealth manager to consider an investment trust, the assets need to be around £300 million for it to have a sufficient amount of liquidity.

Of course, retail investors can consider investment trusts with assets below £300 million, and some are potentially hidden gems. But bear in mind that some small investment trusts have higher costs, including potentially higher dealing spreads.

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James Macpherson, chair of JPMorgan Global Growth & Income, remarked on the consolidation trend.

“There are growing calls from investors for consolidation, with the emphasis on the need for larger, more liquid vehicles that offer highly competitive cost structures,” he said.

“The proposed combination with Henderson International Income Trust provides synergies for both sets of shareholders, reinforcing the company’s position as one of the industry’s largest investment companies, with enlarged net assets of £3.4 billion, and the fourth-lowest ongoing charge at 0.42%.”