J.P. Morgan Brazil investment trust attracts £46.7m

The J.P. Morgan has raised £46.7m for its Brazil investment trust, the first UK closed-ended company focused on the Latin American country.
Retail investors accounted for £18.6m of the money raised, with the rest coming from institutional accounts. J.P. Morgan targeted £50m for the launch.

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Managers Sebastian Luparia and Luis Carrillo plan to run a concentrated portfolio of 40 to 45 stocks, investing in companies which will benefit from increased domestic spending.

It means the trust will be unlikely to hold Petrobras and Vale, which account for a combined 40% of the Brazilian stock exchange.

The trust will be overweight consumer discretionary, consumer staples and industrials, but be underweight energy and materials. Its benchmark is the MSCI Brazil 10/40 Index, which limits any constituent to a maximum of 10% and the top five to 40%. However, the managers intend to diverge substantially from the index.

“When investors think about Brazil, they think the economy is commodity driven because the exchange is so weighted to this area,” client portfolio manager Claire Simmonds says.

“However, domestic consumption accounts for 60% of Brazil’ GDP and is much more diversified than the index would suggest.”

“We want the fund to reflect how the Brazilian economy looks now, rather than how than reflect the stock exchange. We are prepared to go all the way down the market capitalisation spectrum.”

The trust has a management fee of 1% with performance fee equal to 10% of any outperformance of its NAV, providing NAV growth has been positive.