In the face of "significant uncertainty" over the length of time economic sanctions against Russia will remain, the board of the JPMorgan Russian Securities trust has proposed out an amended investment objective to step away from pure Russian equities.
The changes would allow the trust to invest in equities domiciled in central, eastern and southern Europe (including Russia), the Middle East and Africa, including those markets that are considered as emerging markets according to the S&P Emerging Europe, Middle East and Africa index.
In a London Stock Exchange notice made today (27 October), the board said that because of "the inability to dispose of these under the current sanctions and restrictions, the company also needs the flexibility within its new investment objective and policy to continue to hold Russian securities".
These changes will be put to shareholders at the next general meeting on 23 November.
The board first mentioned these changes back in July in its half-yearly report, when the board said it was in the process of seeking FCA approval to change the mandate.
JP Morgan Global Growth and Income: 'We have to sit down and be accountable' to SCIN shareholders
Back then, the board claimed it still had "adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future".
Evidently, the continued headwind of economic sanctions, kept in place by Russia continuing its illegal occupation of Ukraine have forced the trust to change for its own survival.
In today's statement, the board said that due to the illiquidity of some of the trust's existing Russian securities, a wind up or merger of the trust is "not being considered to be a viable option for the company".
The board added that going down that path carried a "significant risk" that the current losses would be "crystallised".
As of 30 September, assets under management of the trust stood at £19m, which was made up of 27 Russian equities. Over the past year the trust's share price total return has fallen 90.8%, according to the Association of Investment Companies.
If these changes are approved by shareholders, it will see the reinstatement of its management fees, which the team wavered days after Russia invaded Ukraine.
However, they said that until further notice the investments in Russian equities would continue to be excluded from the company's net assets for the purposes of this calculation.