JUPITER MERLIN PORTFOLIOS - Trustnet · investors than lower-cost passive funds, such as Exchange...
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ON THE PLANET TO PERFORM JUPITER MERLIN PORTFOLIOS Asset Management An introduction
Transcript of JUPITER MERLIN PORTFOLIOS - Trustnet · investors than lower-cost passive funds, such as Exchange...
ACTIVE FUND MANAGEMENT
On the planet to perform
ON THE PLANET TO PERFORM
On the planet to perform
ACTIVE MANAGEMENT
On the planet to perform
J U P I T E R M E R L I N P O R T F O L I O S
ACTIVE FUND MANAGEMENT
On the planet to perform
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Asset Management
Asset Management
ACTIVE MANAGEMENT
An introduction
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ON THE PLANET TO PERFORM
ACTIVE INVESTING
On the planet to perform
The investment challenge.In a world of ever-increasing choices, spotting the best opportunities and avoiding the biggest risks is not getting any easier.
There are nearly 45,000 companies¹ listed on stock markets across the globe. That’s a lot to choose from before you even start to consider other investments such as property, bonds and a fast-growing variety of alternative investments. The task can be made simpler by choosing to invest in funds, where an expert investor selects investments for you, but even then the choice can be bewildering: there are more than 2,000 funds² registered in the UK alone.
The challenge is how to make sense of all these opportunities and choose what’s right for you. Source: ¹World Federation of Exchanges. ²Financial Conduct Authority, at 09.02.2018.
Introducing the Jupiter Independent Funds team.Jupiter was founded in 1985 and since then we’ve been managing money on behalf of our clients, seeking to deliver attractive returns over the long term.
Around the turn of the millennium Jupiter recognised that, for many investors, the ever broadening spectrum of investment choices was making it increasingly difficult for individual investors to self-select a high quality, diverse and well balanced mix of funds.
In 2001 Jupiter recruited John Chatfeild-Roberts, Algy Smith-Maxwell and Pete Lawery to build a seamless range of multi asset portfolios to fit our clients’ requirements. They had already established an enviable track record in researching and selecting funds before they joined Jupiter. John has managed our Merlin range of funds since 1st May 1997 with Algy joining him in 1999. In 2011, they expanded the team by recruiting Amanda Sillars and David Lewis. Pete Lawery then retired in 2014 but remains involved as a consultant. In 2015, Alastair Irvine joined the team as product specialist to focus on client communication and George Fox recently joined on 6 November 2018 as an analyst. The team’s investment philosophy and strategy has never wavered. Their focus is to maximise returns to investors through long term investment in outstanding funds, managed by talented individuals.
This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. We recommend you discuss any investment decisions with a financial adviser, particularly if you are unsure whether an investment is suitable as Jupiter is unable to provide investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given.
JUPITER MERLIN PORTFOLIOS
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John Chatfeild-Roberts, Head of Strategy, Independent Funds
John has been analysing and investing in funds professionally since 1992. Graduating from Durham University in Economics, John first served in the British Army both in the UK and abroad. He began his fund management career at Henderson followed by Lazard Asset Management. At Jupiter since 2001, John has served as both a Jupiter Main Board Director and Chief Investment Officer. His energies are now entirely focused on managing the Jupiter Merlin Portfolios.
John is a Fellow of the Chartered Institute for Securities & Investment.
Algy Smith-Maxwell, Fund Manager, Independent Funds
Algy is a highly experienced investor and has worked alongside John Chatfeild-Roberts for over 20 years. They began working together at Henderson in 1995 and then subsequently at Lazard. He joined Jupiter in 2001, playing a key role in building the Jupiter Merlin range of Portfolios. Algy’s early career was serving as an officer in the British Army.
Algy is a Member of the Chartered Financial Analyst (CFA) Institute.
Amanda Sillars, Fund Manager, Independent Funds
Amanda joined the Jupiter Independent Funds team in 2011 from JPMorgan Asset Management where she was an Investment Director covering institutional equities and multi-asset funds. She also led the Corporate Governance team for Europe, Emerging Markets and Asia. Prior to this, Amanda spent ten years as a fund manager and analyst.
Amanda is a Fellow of the Chartered Institute for Securities & Investments and a Fellow of the US Securities Exchange Commission Series 7 and Series 3. She has also gained an Award in the Pensions (DB & DC) Management Trustee Exam.
Alastair Irvine, Product Specialist, Independent Funds
Alastair began his career in 1985 with stockbroker Laurie, Milbank & Co. He spent over 20 years in equity research, including being a Managing Director and Deputy Head of equity research for Europe, Middle East and Africa at Merrill Lynch. Moving in to fund management in 2010 he became a Principal and Partner and the Head of Portfolio Management at Triple Point LLP, a fund management house specialising in Venture Capital Trusts and Enterprise Investment Schemes. Alastair joined Jupiter in 2015 as the Product Specialist in the Jupiter Independent Funds team.
Alastair is a Member of the Chartered Institute for Securities & Investment and also holds the Investment Management and Investment Operations Certificates.
MEETING THE TEAM
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George Fox, Analyst, Independent Funds
George joined the Jupiter Independent Funds team as an Analyst in November 2018 having graduated from Bristol University with a First Class Honours degree in History.
David Lewis, Fund Manager, Independent Funds
David’s early career was at IFA Bestinvest as an assistant investment manager within its Discretionary Investment Management department. He joined Jupiter’s Private Client & Charities Team in 2008 as a portfolio assistant then as an assistant fund manager before moving to the Jupiter Independent Funds team in May 2011. David has been a Fund Manager on the Jupiter Merlin Portfolios since January 2014.
David is a Chartered Fellow of the Chartered Institute for Securities & Investments and is a CFA® charter holder.
The Jupiter Independent Funds team employ a robust investment strategy that binds together the principles behind their investment philosophy.
INVESTMENT PHILOSOPHY
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The Jupiter Independent Funds team believes that with deep and thorough research, high quality fund managers can make a difference and deliver better returns for their investors than lower-cost passive funds, such as Exchange Traded Funds (ETFs), after fees over the long term.
Passive funds typically use algorithms rather than human expertise to buy the whole market in the form of an index, for example the FTSE 100 Index, because these funds are trying to produce a return that only matches that of the market. That means they are invested in everything – the good, the bad and the ugly.
Findlay Park American Fund returns since inception, after fees (%)
Past performance is no guide to future performance. Source: Morningstar, nav to nav, net income reinvested in USD, to 31.12.2018.
12-month rolling performance (%)
01 Jan 14 to 31 Dec 14
01 Jan 15 to 31 Dec 15
01 Jan 16 to 31 Dec 16
01 Jan 17 to 31 Dec 17
01 Jan 18 to 31 Dec 18
Findlay Park American Fund 9.8 2.0 9.1 23.0 0.8
S&P 500 Total Return 13.7 1.4 12.0 21.8 -4.4
Past performance is no guide to future performance. Source: Morningstar, nav to nav, net income reinvested in USD., to 31.12.2018. Inception date: 09.03.1998.
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Active fund managers, on the other hand, apply their expertise and intuition with the aim of investing in only the most promising investments in the market. Nobody will be right 100% of the time, of course, but the skill of fund managers with the ambition and ability to generate the best returns can make a big difference over the long term.
The chart below illustrates the return profile of an active fund manager, whose fund has long been a part of the Jupiter Merlin Portfolios. Through skill and judgement, the fund manager has been able to deliver superior returns after fees.
Past performance is no guide to future performance. Source: Bloomberg, net of fees, nav to nav basis, in USD. Internally produced by Findlay Park Partners to 31.12.2018. Inception date: 09.03.1998 *The compound annual growth rate (CAGR) is the average annual growth rate of an investment over a specified period of time longer than one year.
Fund and index performance (%)
2018 return CAGR* since fund inception
Findlay Park American Fund 0.8 12.1
S&P 500 Net 30% Total Return -4.9 5.6
Findlay Park itself was founded in 1998 by James Findlay and Charlie Park, although John Chatfeild-Roberts had been investing in funds managed by James since 1992 and knows his philosophy well. The 11-strong team does not restrict itself by company, size or sector. It avoids taking extreme
risks and has a dominant focus on preserving capital when markets fall. It is also an example of the kind of fund that is only accessible through a multi-manager portfolio such as the Jupiter Merlin Portfolios, as the fund has been closed to new investors since 2000.
Invest with expertsIn professional fields there are clear benefits to seeking the assistance of specialists. The Jupiter Independent Funds team have decades of experience between them, having encountered both boom times and more difficult periods during their careers. This experience and the expertise they have acquired in the process means they are ideally placed to assess the full range of opportunities in the investment landscape and make fund selections which could prosper in those conditions.
The fund managers who run the funds within the Jupiter Merlin Portfolios are themselves experienced specialists in their fields. The world of investing is large and nobody can be an expert in every area but the Jupiter Independent Funds team only needs them to excel in their specific field. So the team seeks out experts in managing UK shares, Japanese shares, or global bonds for example, as needed and blends these together into six different portfolios each with a different objective. The portfolios range from the cautious, UK-biased Jupiter Merlin Conservative Portfolio to the most adventurous Jupiter Merlin Worldwide Portfolio which invests in shares across the globe.
Keep it simple and tax efficentFor professional and amateur investors alike, there has never been more choice. There are thousands of funds from which investors can choose, and new types of fund have introduced ever more complex strategies.
The Jupiter Independent Funds team do not believe that greater complexity leads to better investment returns, indeed arguably the opposite. That is why they invest in funds that have a straightforward and robust investment strategies, that are implemented with great efficiency by talented individuals.
A great advantage of investing in the Jupiter Merlin Portfolios is that investors need no longer worry about many of the tax implications of having an actively-managed portfolio of funds. This is because when the Jupiter Independent Funds team buy or sell funds within the Portfolios, there is no capital gains tax liability for the Portfolio’s investors, as there would be if the investor was holding those funds directly. Capital gains tax only comes into play when the investor eventually chooses to sell the Jupiter Merlin Portfolio itself. It’s worth considering that the Jupiter Merlin Portfolios are all eligible for beneficial tax wrappers such as an ISA or SIPP. Please note Jupiter is not permitted to provide tax advice. This is based on our understanding of current tax laws and may be subject to change.
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Invest for the long termInvesting is a marathon, not a sprint. Investors can easily become concerned by volatile markets, but having patience is vital. The great investor Benjamin Graham once said “In the short run, the market is a voting machine but in the long run it is a weighing machine”, meaning that short term market movements simply reflect which companies are popular at that time, but in the long term good companies are rewarded for increasing profits to investors.
Keeping a check on one’s emotions is an important discipline to have, particularly in challenging investing environments. For example, markets can move up or down but almost never do so in a smooth line. Prices can move suddenly and some of the worst days in the market might come during a period of generally rising prices and some of the best days can come shortly after a sharp fall.
Rather than trying to guess whether the market will rise or fall tomorrow, the best plan is often to be patient and stay invested.
As an illustration, the chart on the next page shows the potential effect on returns if an investor had, through poor decisions or simply bad luck, missed out on the 20 best days in the market over a ten-year period.
What an incredible difference just 20 days can make over ten years! That’s one of the reasons why the Jupiter Independent Funds team invest in the way that they do. By trusting in their investment principles – using their experience, investing patiently over the long-term, and favouring skilled fund managers with simple and effective investment strategies – they have confidence that they can deliver superior returns over the long term.
Naturally, investing involves risks. Market and currency movements can cause the value of an investment to go up or down and in the worst case you may lose your invested money. You should consult a financial adviser if you are unsure if an investment is right for you. Jupiter is not able to provide investment advice.
In conclusion‘Simple’ and ‘easy’ are not the same thing, so although the Jupiter Independent Funds team’s philosophy might sound simple – invest for the long term in a diverse selection of funds managed by high quality, active fund managers – being able to beat the market is far from easy.
The team is extremely proud of the long-term track record of the Jupiter Merlin Portfolios, but inevitably some years are better than others. Markets sometimes
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Impact of missing 20 ‘best’ days on 10-year performance (%)
Past performance is no guide to future performance. Fund performance data is calculated on a NAV to NAV or bid to NAV dependent on the period of reporting, all performance is net of fees with net income reinvested in GBP. Source: FE 31.12.2018. Note: Jupiter Merlin Real Return was launched on 09.07.2018.
move suddenly and in unexpected ways, but in times of crisis it is the value of what Leo Tolstoy called “the two most powerful warriors” – patience and time – that characterise the way in which the Jupiter Merlin Portfolios are managed. We believe the consistency of personnel and investment approach of the Jupiter Independent Funds team – and the expert fund managers in which they invest client savings – should continue to serve clients well in decades to come.
Rolling 12-month performance (%)
01 Jan 14 to 31 Dec 14
01 Jan 15 to 31 Dec 15
01 Jan 16 to 31 Dec 16
01 Jan 17 to 31 Dec 17
01 Jan 18 to 31 Dec 18
Jupiter Merlin Conservative Portfolio 3.8 0.9 9.0 6.6 -2.1
Jupiter Merlin Income Portfolio 4.4 2.0 7.9 8.4 -3.5
Jupiter Merlin Balanced Portfolio 6.5 6.0 14.2 11.2 -2.3
Jupiter Merlin Growth Portfolio 7.4 6.1 16.2 10.8 -3.9
Jupiter Merlin Worldwide Portfolio 7.9 4.2 19.7 11.7 -3.2
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Points to considerAnnual fees for multi-manager funds tend to be higher than for those run by a single manager, since a portion of that fee must go towards paying for the management of the underlying funds. The Jupiter Merlin Conservative Portfolio can invest more than 35% of its value in investments that are issued or guaranteed by an EEA state, which includes all the countries in the European Union plus Iceland, Liechtenstein and Norway. The Jupiter Merlin Income, Jupiter Merlin Balanced and Jupiter Merlin Conservative portfolios all deduct annual fees from the investors’ capital rather than income, which reduces the potential for capital growth in favour of producing a higher income. Some important regulatory documentation – the NURS Key Investor Information Document, Supplementary Information Document and Scheme Particulars – are available from Jupiter’s website or by request.
Note: Jupiter Merlin Conservative Portfolio and Jupiter Merlin Real Return do not have a 10-year track record.
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Important Information: This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. If you are unsure of the suitability of an investment please contact your financial adviser. We recommend you discuss any investment decisions with a financial adviser, particularly if you are unsure whether an investment is suitable as Jupiter is unable to provide investment advice. Past performance is no guide to the future. The views expressed are those of the author at the time of writing and may change in the future. This is particularly true during periods of rapidly changing market circumstances. Any data or views given should not be construed as investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given. Jupiter is not permitted to provide tax advice. This is written based on our understanding of current tax laws and may be subject to change. Jupiter Unit Trust Managers Limited (JUTM) is authorised and regulated by the Financial Conduct Authority. Registered address is The Zig Zag Building, 70 Victoria Street, London SW1E 6SQ. No part of this document may be reproduced in any manner without the prior permission of JUTM and/or JAM.
