A high conviction, stock-picking European equity fund that blends rigorous fundamental analysis with strong risk controls. The fund is managed dynamically, with a constant drive to include the best ideas in the portfolio. Within its sector, the fund features in our ‘Larger-Cap, Blend’ category.
The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 6. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 6 means the fund’s historic volatility is between 15% and 25%.
The fund’s 5-year risk score incorporates a period when it was managed by the previous managers, using a different investment process. Based upon the current team’s track record at previous firms, our expectation is that this fund’s risk profile will be similar to that of the index over time. This stems from the funds blended style profile and bias to large-cap companies. Different share classes could have differing SRRI scores.
Niall Gallagher joined Jupiter as lead manager of the fund in May 2025. Prior to this, he was the lead manager of GAM’s European Equities franchise between 2009 and 2024. Earlier in his career, he worked as a European equity fund manager at T. Rowe Price and BlackRock. He is supported by fellow investment managers, Christopher Sellers and Chris Legg, who both worked with him at GAM.
The managers invest on the basis that companies that generate superior returns on capital employed and allocate capital efficiently will outperform over the medium term. Therefore, they seek out companies where the returns on the capital employed exceeds the cost of capital on a consistent basis. These companies should then be capable of generating attractive long-term returns for shareholders. Equally, they strive to avoid companies that deploy capital poorly and therefore experience deteriorating returns over time.
The fund typically features between 30 and 50 holdings, with an individual stock size of between 1.5% and 4%. Position size is a function of the risk characteristics of any new investment in relation to the existing portfolio, twinned with the level of fundamental conviction in the potential new holding. The portfolio is constructed with a “risk-first” mindset, and the expected tracking error is in the 4-6% range. The decomposition of risk factors is deciphered using multiple models, although the team favours the Bloomberg MAC3 model.
The initial stage of the investment process is designed to identify companies that generate high returns on capital employed and have an above average growth outlook. They seek to understand the defensibility of those returns by intensive stock level research. This involves the assessment of both the industry and stock level dynamics in terms of the company assessment.
The stock level analysis incorporates a review of historic company returns through the cycle, as well as an assessment of the financial gearing and balance sheet of the business under review. There is also an assessment of the global competitive position of the business, as well as a review of potential technological disruption and any material ESG risks within the business. The team typically visits the company’s management to understand the culture of the business and attitudes towards capital allocation. Significant emphasis is placed upon the success of past capital management decisions. The team builds a detailed company financial model for each business under review and generates a discounted cash flow evaluation and a multiples-based assessment of value to generate sensible fair value range for the stock. Throughout the stock analysis, extensive use is made of Third Bridge, which is an expert network used to develop preparatory insights on both the company and the industry in which it operates.
The next step is to prioritise the best ideas for the portfolio. Any new idea will be considered in relation to the overall portfolio, with priority given to positions that can be scaled (at least 1.5% of the portfolio) and that ideally also offer risk diversification benefits. Stocks are sold when there is a change in the operating environment or valuations are deemed excessive.
Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above.
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