Notification of changes to the underlying funds of various JPMorgan funds (Asia)
28 Jun 2022
Notification of changes to the underlying funds of:
- J30 JPMorgan India (the “Affected Mirror Fund 1”)
- J32 JPMorgan Pacific Securities (the “Affected Mirror Fund 2”)
- J47 JPMorgan Thailand (the “Affected Mirror Fund 3”)
- J95 JPMorgan Pacific Technology (the “Affected Mirror Fund 4”)
- L36 JPMorgan Indonesia (the “Affected Mirror Fund 5”)
- L86 JPMorgan India Smaller Companies (USD) (the “Affected Mirror Fund 6”)
- P66 JPMorgan Asian Smaller Companies (the “Affected Mirror Fund 7”)
- R08 JPMorgan ASEAN (the “Affected Mirror Fund 8”)
- J34 JPMorgan Asia Growth (the “Affected Mirror Fund 9”)
(together the “Affected Mirror Funds 1-9”)
SUMMARY OF THE CHANGES
We have been notified by JPMorgan Funds (Asia) Limited (the “Company”) of various changes to the underlying funds of the Affected Mirror Funds 1-9 (the “underlying funds”). These changes will take effect from 25 July 2022 (the “Effective Date”).
The following is an extract from the Company's Shareholder Circular of the underlying funds in regard to the changes:
“The respective trust deeds of all the Funds empower the JPMorgan Funds (Asia) Limited, as the manager of the Funds (the “Manager”), to adjust the net asset value per unit of the Funds to reflect the fiscal charges which, as the Manager estimates, would be incurred by the Funds in order to buy or sell the underlying securities to meet subscription or redemption requests (the “Adjustment Mechanism”). The purpose of the Adjustment Mechanism is to protect interests of all investors of the Funds under specific circumstances (including but not limited to high volatility and/or lack of liquidity in the underlying market) where dealings of units in the Funds might result in potential impact on the interests of existing investors (hereinafter referred to as “dilution effects”).”
Circumstances under which the Adjustment Mechanism may be applied
From the Effective Date, the offering documents of the underlying funds of Affected Mirror Funds 1-8 will be amended to provide that the underlying Manager may make swing pricing adjustments when the net capital flow of an underlying fund of an Affected Mirror Fund exceeds the threshold pre-determined by the underlying Manager from time to time and if the underlying Manager considers it is in the interests of all unitholders to do so.
Increase in the maximum rate of adjustment
From the Effective Date, the offering documents will be amended to provide that, under normal market conditions, the adjustment rate will not exceed 2% of the net asset value per unit of the underlying funds of Affected Mirror Funds 1-8 or classes; however it may be significantly higher during extreme market conditions such as periods of high volatility, reduced asset liquidity and market stress. In any event, unless with the approval of the underlying fund Trustee and the Securities and Futures Commission (if required), swing pricing adjustment rate exceeding 2% will only be applied on a temporary basis and will not exceed 5%.
Renaming of the Adjustment Mechanism
The Adjustment Mechanism will be renamed as “swing pricing” (currently referred to as “fiscal charge” in the current underlying funds’ offering documents).
Introduction of the Adjustment Mechanism to the underlying fund of Affected Mirror Fund 9 on a permanent basis
In April 2020, the Company advised that, in light of the prevailing market conditions resulting from the impact to the COVID-19 pandemic, the underlying fund Manager decided to introduce the Adjustment Mechanism to the underlying fund of Affected Mirror Fund 9 on a temporary basis.
With a view to protect interests of all investors in the underlying fund of Affected Mirror Fund 9 in potential market volatility and exceptional circumstances in the long run, the underlying Manager has decided to allow the Adjustment Mechanism to be applied to the underlying fund of Affected Mirror Fund 9 on a permanent basis from the Effective Date. The Adjustment Mechanism applicable to the underlying fund of Affected Mirror Fund 9 from the Effective Date will have the same features as the one applicable to the underlying funds of Affected Mirror Funds 1-8 and will be known as “swing pricing”.
A full breakdown of the changes can be found in the Appendix document opposite.
