JPM Global Core Real Properties reduces its listed exposure to increase its portfolio of private assets.
Real estate, infrastructure, and transportation securities are among the listed real assets that the JP Morgan Global Core Real Assets (JARA) trust is gradually lowering in order to “recycle” them into private assets.
Between November of last year and the end of August, the trust, which is managed by JP Morgan’s Alternative Solutions Group under the direction of Jamie Kramer, decreased its exposure to listed real assets within the portfolio by 5.5%.
A sizeable portion of this reduction has been reinvested in private real estate, with an emphasis on the US single-family housing, industrial, and logistics sectors.
“The US has a very strong dollar right now, and although we do believe that the possibilities of a recession in the US are larger, consumer, corporations, and the financial sector are in extremely good health,” said Kramer, who is also JARA’s co-manager.
Kramer added that while rising interest rates undoubtedly had harmed and slowed down retail housing, they anticipated a gentle landing for the rest of the real estate market that would happen rather quickly.
Furthermore, she stated that many laws that were very pro-industrial and infrastructural had been passed in the US, and they would be quite beneficial to the portfolio.
Throughout the year, JARA increased its allocation to North America by 5% while decreasing its exposure to Europe and the Asia-Pacific region, mostly through its liquid allocation.
According to its 2022 annual report, the portfolio’s current global distribution is 54% North America, 28% APAC, 16% Europe, and 2% UK.
The portfolio’s new 10% position in JP Morgan Asset Management’s US real estate mezzanine debt strategy, which provides exposure to mostly multifamily housing and office loans, was also funded by the reduction of the trust’s listed assets sleeve and fresh inflows.
This year, JARA appears to have benefited from its rotation into less volatile assets. According to Morningstar data, the company’s total return on shares has improved by 14.19% year to date, while its NAV has risen by 13.01%.
With the sector’s NAV up by 1.87%, the trust has outperformed the Morningstar IT Flexible Investment sector, which has lost 13.38% so far this year. The AIC indicates that JARA is currently trading at a discount of 2.84%.
