From Reuters

LONDON, Oct 10 (Reuters) - The boards of two emerging market investment trusts run by JP Morgan’s fund arm and F&C Asset Management  called for a merger on Monday, which if agreed would create one of the largest funds in the sector.

The proposal would create a portfolio with total assets, based on values taken at the end of August, of 428 million pounds ($754.3 million), according to the Association of Investment Trust Companies.

The two listed funds are called the JP Morgan Fleming Emerging Markets Investment Trust (JMG.L: and the F&C Emerging Markets Investment Trust (If they merge, the new portfolio will be run by JP Morgan Asset Management. Shareholders at both funds are expected to vote on proposals later this year, David Barron, head of investment trust at JP Morgan Asset Management, told Reuters. A merger would underscore the strong growth of trusts that invest in emerging market companies and countries, he said.

"At the moment, it (the sector) is extremely popular. What the boards are trying to do is create a larger and more liquid trust with a high profile."

At present, the largest portfolio in this sector is the Templeton Emerging Markets Trust, with total assets just under 1.3 billion pounds, according to end-August data from the AITC.

A merger would be carried out by restructuring the F&C Emerging Markets Trust, offering shareholders the option of taking up new JPMF Emerging Markets Trust shares, or by liquidating all or some of their holdings for cash, the trusts said in a statement.

JP Morgan will make a cash contribution equal to 1 percent of the asset value rolling into the JP Morgan fund, of which about half will go to shareholders of the F&C Emerging Markets Trust and the other half to JPMF Emerging Markets Trust shareholders.

JPMF Emerging Markets will incur no asset or income dilution as a result of the transaction," the statement added.