Frequently asked questions on subscription shares
What are subscription shares?
Subscription shares have similar characteristics to warrants, in that they offer shareholders the right to purchase shares at specified future dates or during predetermined conversion periods at predetermined prices. Unlike warrants, subscription shares qualify for the stocks and shares component of an ISA and self invested personal pensions (SIPPs).
How do subscription shares work?
Subscription Shares, like warrants, lock in prices at which new ordinary shares may be subscribed for on future conversion dates or during predetermined conversion periods. As a holder of subscription shares, an investor can decide whether to subscribe for new ordinary shares on these dates. Investors would usually choose to convert their subscription share rights if the market price of an investment trust’s ordinary shares exceeds the conversion price by more than the subscription share price at the relevant conversion date.
For example, if the conversion price on the relevant conversion date was 150p and the market price of ordinary shares on that date was 100p, it would be anticipated that the subscription shares would not be converted. However, if the market price of ordinary shares on that date was 200p, it is likely that subscription shares would be converted.
Are subscription shares tradable in their own right?
Subscription shares can be bought and sold independently of the ordinary shares. Once issued, if an investor does not wish to retain their subscription shares, they can sell them on the stock exchange as they would sell any other security.
How are subscription shares priced in the market?
The value given to subscription shares by traders is largely dependent on the underlying price of the ordinary shares that they are linked to. In general, this will increase as the price of the ordinary shares rises above the conversion price. Other factors that could influence the price include any stepped exercise prices, the time until conversion, share price volatility, interest rate movements and dividend yield.
How do I convert my subscription shares?
J.P. Morgan has five investment trusts with subscription shares in issue. Full details of the conversion prices and how to convert are detailed on the each of the trust pages, which can be accessed from the links below:
JPMorgan Asian Investment Trust
JPMorgan Chinese Investment Trust
JPMorgan Emerging Markets Investment Trust
JPMorgan Indian Investment Trust
JPMorgan Japanese Smaller Companies Investment Trust
J.P. Morgan Investment Trust range
View our full list of Investment Trusts