The views expressed in this article are those of its author and not necessarily those of ShareSoc
An investment trust that I invest in, JP Morgan Global Growth and Income (JGGI) held an important general meeting today. The purpose of the meeting was to approve its takeover of another investment trust, The Scottish Investment Trust (SCIN).
I was shocked to read the RNS announcing the results of the general meeting issued this evening. Not shocked or surprised that the resolutions were overwhelmingly passed but shocked that only around 22% of the company’s shares were voted.
This takeover was not a foregone conclusion, from the perspective of shareholders. The argument in favour is that the takeover increases the AUM of the trust and spreads the fees over a larger capital base. Indeed a new, favourable, fee deal has been agreed. There is, however, an argument against: whereas JGGI has consistently (in recent years) traded at a premium to NAV, SCIN has tended to trade at a discount. Admittedly, the reason for the differential discount is that the performance of SCIN was weaker. Ahead of the merger JP Morgan took over management of SCIN and realigned its portfolio to be identical in structure to that of JGGI, so the merger won’t impact future NAV performance. However, there is a risk that JGGI’s premium rating could be diminished through the “taint” of SCIN. Nevertheless, I personally voted in favour of the deal.
It is therefore shocking that so few votes were cast on a matter of such fundamental importance. Whilst I don’t have specific evidence for this view, I find it unlikely that shareholders were apathetic about this decision. Is it possible that many beneficial shareholders simply didn’t know about this meeting? Or did they perhaps find it too difficult to vote? If you hold shares in the JP Morgan Global Growth & Income IT (JGGI) and are happy to share your experience please complete this quick Twitter Poll. Only one major shareholder is listed in the 2021 annual report: Rathbone Investment Management holding around 10% of the shares.
ShareSoc will continue to press for proper enfranchisement of beneficial shareholders. In particular, companies (and valid register enquiries) should have access to the contact details of their beneficial shareholders and be required to send communications to them, as they are for registered shareholders.
Readers should also note that they should set up news alerts for stocks that they hold, as explained here. That way you can be confident of not missing any important news relating to your investments.
Mark Bentley, Director, ShareSoc
DISCLOSURE: The author holds shares in JGGI but not SCIN.
Final results of the poll, mentioned above:
14 responses.
0% voted
14% (2) chose not to vote
21% (3) found voting too hard
64% (9) weren’t aware of the meeting
As I suspected, it appears that many beneficial shareholders simply hadn’t received the circular about this important matter. ShareSoc will communicate this to the relevant authorities as further evidence in support of our demand for proper enfranchisement of ALL shareholders.
as i normally hold my shares in a nominee account i cant vote anway; for me the unusual thing i noted is that jggi suddenly reverted to a discout of c 4pc- i have no idea wheter that is good or bad; suffice it to say that i bought into scin recently before the merger as it was on a discount
Hi Ali,
The move from a premium to discount confirms my fear, as mentioned in the article, that the “taint” may affect the discount to NAV. I suspect that this is a result of either arbitrage (folks buying the SCIN shares before the takeover with the aim of selling when the takeover took place), or “stale” SCIN holders, who saw the takeover as an opportunity to exit at a better price. If I’m right on that, then the move to a discount should only be temporary, until the sellers have cleared. Anyway, I used the discount as an opportunity to add to my JGGI holding!
More troubling is that you don’t think you can vote your shares because they are in nominee. Most nominee operators should permit their clients to vote their shares. Often you have to send them a secure message to do so, if they don’t provide a more direct means of submitting your vote.
I suggest that you ask them about this. If they really don’t let you vote, then please name & shame them! ShareSoc is very troubled by platforms that won’t facilitate voting by their clients – any evidence of this is useful in our fight for shareholder rights.
Best,
Mark