Private investors flex muscles ahead of trust proposed mandate change

Shareholders of JPMorgan Russian Securities Trust will vote this month on a proposed new mandate.

• Shareholders of JPMorgan Russian Securities Trust will vote on 23 November on a proposed new mandate

A group of private investors who are shareholders in JPMorgan Russian Securities (LSE:JRS) have got together to push for a ‘no’ vote as the investment trust seeks to change its mandate. 

The proposed change will be put to an EGM vote on the 23 November, and will decide whether the Russia-focused trust will alter its investment remit to also include Emerging Europe, the Middle East, and Africa. 

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interactive investor, the UK’s second-largest direct to consumer investment platform, comments.

Lee Wild, Head of Equity Strategy, interactive investor, says: “We have long argued that private investors should be heard in the boardroom – their votes count, and there is strength in numbers. Whatever you think about the resolution on the table in the case of JPMorgan Russian Securities - and this is not a subject that everyone will find palatable - this latest shareholder revolt is an example that some voting issues can get shareholders animated.

“If the group can pull together 100 individual investors of the trust, which is what they are claiming, this might not sound like a substantial amount, but they say that this is 5% of the trust shares. These are not insignificant numbers, if true.

“Ultimately, it’s not for a platform such as ii to decide what’s important – investors must make that choice for themselves, and this is evidence that shareholders are feeling more empowered to take collective action when they feel it is necessary.”

The vote in more detail

Sam Benstead, Collectives Specialist, interactive investor, explains why these investors are taking action: “This is clearly an emotive vote on many levels, and the board of this investment trust has to consider what they think is in the best interests of all shareholders. While some investors may not have the same constraints as institutional investors, and may be happy to see how the Russia story plays out, others will be only too keen to steer away. 

“Investors have to do what they think is best, and this is very personal. This particular shareholder group argues that the true NAV of the trust is far greater than J.P. Morgan Asset Management is calculating, and therefore there is value to be unlocked from the portfolio if the trust’s managers wait until they can receive a fair value for their Russian investments. But this is a truly difficult situation, and they might be waiting for a very long time – others will be only too keen to see the trust repurposed.” 

JP Morgan Russian Securities shares have continued trading, but the net asset value (NAV) of the trust has been marked down due to sanctions on Russian companies following the invasion of Ukraine and foreigners being blocked from trading Russian shares.”

2022: a key year for retail investor activism, but more progress to be made

The big switch 

interactive investor has seen a significant jump in voting on its platform, and this is no happy accident. The number of votes processed on ii in H1 2022 was up 48% on H1 2021, with 133,997 votes processed. This dramatic increase demonstrates what can be achieved when investment platforms remove barriers and red tape.

In November 2021, ii made being able to vote at company annual general meetings, and other voting events, the default setting (previously opt-in) on ii (customers can still opt out). 

• Shareholder voting & information. Have your say on the companies you invest in

Those who stay opted in are notified when they are eligible to place a vote via ii’s ‘voting mailbox’ service online (unless you unsubscribe from the service), as well as being notified of shareholder events, such as AGMs.