A concentrated, high conviction UK equity fund, invested primarily in larger-cap stocks. The manager can be contrarian in his approach and manages the fund with a long-term investment time horizon. Within its sector, the fund features in our 'Larger-Cap, Blend' category.
The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 5. 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 5 means the fund’s historic volatility is between 10% and 15%.
The manager was appointed in June 2023, but the long-term risk/return pattern is a fair reflection of our expectations for the future. The fund’s five-year standard deviation is slightly more elevated than that of mainstream UK equity index. This is to be expected given the concentrated, high conviction nature of the approach. The fund’s tracking error is more aligned with others in the peer group, in part because of the fund’s large-cap bias. Different share classes could have differing SRRI scores.
The fund is managed by Ed Meier, who joined Jupiter in 2013 following the acquisition of Merian Global Investors. He is assisted by James Moir, who is also the lead manager of Jupiter Responsible Income. Jupiter's UK capabilities are organised under the areas of Income, led by Adrian Gosden, and Alpha (relevant to this fund), led by Alex Savvides.
The manager believes that he can achieve superior returns by investing with a long-term investment time horizon. He argues that many investors are distracted by short-term effects, with the result that they misinterpret the scope for a company to create value over the long term.
This is a concentrated fund of 30 to 40 high conviction ideas. Typically, the fund features 75% - 80% in large caps, 20% - 25% in mid caps and has no small-cap stocks. Position sizes reflect degrees of conviction, potential upside and liquidity considerations. 5% is typically the maximum position size. Given the long-term investment horizon, name turnover is low. Jupiter’s Independent Risk team conducts comprehensive analysis, including stress-testing and liquidity analysis.
The investment approach combines bottom-up, fundamental research with a thematic overlay to help hone ideas. This approach is designed to identify winning business models and rewarding turnaround situations. At the same time, the manager seeks to filter out and avoid companies that are facing sustained challenges. New ideas are often the result of persistent share price weakness, poor results, new management or a change in economic conditions.
The manager’s fundamental work is focused upon understanding the following key factors: industry characteristics (eg growth drivers, cyclicality); the company’s position within the industry (eg market share, competitive advantage); profit and loss dynamics (eg revenue drivers, margin structure); returns on invested capital (eg trends, investment opportunities); and, balance sheet and cash flows (capital structure, cash conversion of profits). Also important is the track record of company managements and the degree to which value has been created for shareholders, as well as corporate governance and incentive arrangements, which he believes can contribute significantly to driving returns. Investment ideas are generated across the desk, with all team members undertaking proprietary research. The resultant portfolio features a mix of poorly performing businesses that are undervalued compared to their potential, with proven businesses where the valuation may be higher but, where there is a belief in the company’s ability to deliver growth in profits.
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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