JP Morgan looks to launch a new closed-ended fund for senior loans
JP Morgan Asset Management is considering launching a London-listed investment company, offering access to a portfolio of senior secured loans with a US market focus.
The launch earlier this year of the JPMorgan Global Convertibles Income Fund underscored the strong demand in the marketplace for asset classes that can deliver high current rates of income.
The new fund will target an initial dividend yield of 5%, JP Morgan said.
JP Morgan Asset Management said it sees opportunities in the loan market to attain relatively high rates of current income, while offering some protection in a rising interest rate environment as well as potential capital appreciation.
“Loans are floating-rate instruments and thus provide a level of protection in a rising rate environment that may not be available from bonds, where coupons are typically fixed. However, similar to bonds, they offer investors the security of a regular income stream,” JP Morgan’s spokeperson said.
Simon Crinage, head of Investment Trusts at JP Morgan Asset Management, said: “Bank loans are justifiably drawing attention because they offer a high regular income from a floating rate portfolio of senior securities, protecting investors from credit risk and the threat of rising rates.”