Following The Adviser Centre Monthly Review Meeting held on 2^nd October 2019, we have moved the Jupiter European fund to our Positive Watch list.  The fund previously featured on our Established list.

In April 2019, it was announced that the previous manager, Alexander Darwall, would be leaving the firm (see our Bulletin).  The fund was formally handed to the new managers, Mark Nichols and Mark Heslop, on 1^st October 2019.  They joined from Columbia Threadneedle, where they worked together for several years.  Mr Nichols is an experienced European equity manager, having run funds in this area since 2001.  Mr Heslop began his career in 1999 and brings experience in European smaller companies and global mandates.  We have known Mr Nichols for several years through our coverage of the Threadneedle European Select fund.

Jupiter European has stood out as a stalwart of growth investing in European equities for many years.  In keeping with this heritage, the two new managers are both dedicated growth investors.  The focus is upon companies with strong business models that have secular growth characteristics, sustainable returns on capital and credible management teams.  Favoured stocks typically display high barriers to entry, which could be expressed through prized intangible assets, a significant cost advantage or highly efficient, scaled operations.  The managers spend time analysing industry structures and use Porter’s Five Forces as a framework for assessing competitive intensity and industry profitability.

As before, the portfolio will display clear “quality” and “growth” characteristics and a bias away from more cyclical parts of the market.  We expect to see some changes to portfolio construction, notably less concentration at the top end of the portfolio.  Nonetheless, weighty positions will still be held in favoured stocks and this, together with the managers’ benchmark agnosticism and long-term investment horizon, is likely to result in an idiosyncratic performance outcome, but one that is correlated to growth as a style.

It is always prudent to exercise caution when managers move to other firms, given changes of culture, resources and operating procedures.  As this is an extremely important franchise for Jupiter, we are confident that every effort will be made to ensure the managers have what they require to be successful.  We look forward to following Mr Nichols’ and Mr Heslop’s progress in this endeavour.