JPMorgan American trust waives fee following manager change and scraps performance fee

The fee changes are the result of a new strategy being adopted by the trust. 

Funds and Investment Trusts August 15, 2019 by Tom Bailey

JPMorgan American investment trust has announced that it will not charge a management fee for nine months and will no longer charge a performance fee. 

The trust, which has almost £2 billion under management, stated in its half yearly report that it will waive any management fees dating from June 2019. The fund’s ongoing charge fee (OCF) had stood at 0.38%.

The suspension of its management fees is the result of a recent change in management and subsequent new investment strategy.

In October 2018, Garrett Fish left as portfolio manager. He was replaced by Jonathan Simon and Tim Parton. While new managers often attempt to keep the trust’s investment style or strategy the same, earlier this year (in March) JP Morgan announced that the trust’s new management duo would be making several changes.

The trust’s portfolio is split in two, with a larger company bucket, which can range from 90% to 100% of the overall portfolio, and a smaller companies component of up to 10%. The strategy changes saw the large cap segment move towards a higher conviction approach, with the new portfolio consisting of somewhere between 30 and 40 stocks.

The trust also confirmed it will cover the transition costs of implementing the strategy change (the cost of buying and selling shares). Normally, investors pick up the tab.

Meanwhile, the performance fee has been scrapped in order to “simplify” the trust’s fee structure.

Fund analysts are broadly split on the useful of performance fees, with one side arguing that they allow managers to be held to account for performance, while the other says it adds a new layer of complexity making fees less transparent.

Alongside the announcement of the fee changes, the trust reported that it had failed to beat its benchmark, the S&P 500, in the first half of 2019. As at the end of June, JPMorgan American produced a total return of 15.3%, while the index returned 18.4% in sterling terms.

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