View more on these topics

An energetic option from Jupiter

Jupiter Asset Management – Global Energy Fund

Type: Unit trust

Aim: Growth by investing globally in companies involved in the exploration, production, transmission and distribution of energy

Minimum investment: Lump sum £500, monthly £50

Investment split: 100% globally in companies involved in the exploration, production, transmission and distribution of energy

Isa link: Yes

Charges: Initial 5.25%, annual 1.5%

Commission: Initial 3%, renewal 0.5%

Tel: 020 7314 7699

The Jupiter global energy fund is a unit trust that invests globally in companies in the energy sector. It will invest mainly in equity, equity-related and fixed income securities, with a typical portfolio of 30 to 60 holdings.

Putting the fund in to its market context, Flowers McEwan director David Flowers says: “The Jupiter global energy fund is, in terms of its investment objectives, a fund for our time. The fund is hunting for growth in the energy sector, investing mainly in growth stocks.

“The rationale is that energy demands are inexorably rising as the developing world becomes dependant upon a ready supply of heat, light and power.”

Flowers adds that the developed world continues to chew up vast amounts of natural resources in maintaining its chosen lifestyle.

“In exploiting this, the fund managers are almost certainly correct. So the question comes down to whether the manager, Derek Pound, knows his onions – or rather his acreage and exploration blocks.”

Acreage refers to the measurement of land in acres and exploration blocks are areas of land that are drilled in the search for oil and gas.

Flowers feels that Pound has a good track record managing money in the energy sector within Jupiter over the last 12 years. “Nevertheless the new fund has got to be acknowledged as a high risk one and we can expect quite extreme volatility as it is exposed to all sorts of geo-political and economic vagaries,” says Flowers. He notes that Pound is not constrained by geography, style or company size, but is likely to be growth and equity biased.

“Interestingly, despite Jupiter’s wonderful pedigree in environmental and green investing, this fund will make no attempt to follow that investment view. There is no green screening or positive investing. This seems a shame and somewhat conflicts with the ethos at Jupiter,” says Flowers.

In Flowers’ view, the fund will be an attractive proposition for someone who is willing to take a longer-term view and comfortable with a high degree of volatility, with no environmental concerns.

However, he takes issue with the fund’s charges of initial 5.25 per cent and annual 1.5 per cent. “The fund comes from an old-school charging structure with a painful reduction in yield of 2.7 per cent at best. Assuming 6 to 7 per cent annual returns and with the current rate of inflation, that doesn’t leave much return at all to compensate for the risk being taken.

“It is going to have to go some to justify the charges and the likely volatility,” he says.

Discussing funds that could provide competition, Flowers says: “There are two established funds – the Investec global energy fund which has a good track record and is not too expensive; and the Capita Junior oils trust with a good track record too. But it is a smaller fund at £50m and is more costly.”

Flowers adds that Artemis and BlackRock are among a small number of managers that have launched similar funds recently.

BROKER RATINGS

Suitability to market: Good

Investment strategy: Good

Charges: Average

Adviser remuneration: Average

Overall 8/10

Recommended

1

FSA stalls on ruling over cash rebates

The FSA has delayed its decision on whether to ban cash rebates from platforms to clients and declared its intention to ban all payments between providers and platforms. In its platform policy statement, published this week, the FSA says it is “desirable” to ban cash rebates from product providers to investors, as well as product […]

6

FSA platform paper adds weight to calls for RDR delay

Aifa says yesterday’s decision to delay the FSA’s proposed ban on rebates and the regulator’s new guidance on independence is further evidence of a need to relax the retail distribution review deadline. As part of its platform policy statement, published yesterday, the FSA says it believes it is “desirable” to ban cash rebates from product […]

IPPR has plan for national pay cover

The Institute for Public Policy Research has called for the introduction of national salary insurance. The thinktank has come up with the idea to address concerns that the welfare system does not reflect the amount that people have paid into National Insurance. Jobseeker’s allowance for people who have paid a minimum level of NI is […]

Principality launches first securitisation

Principality Building Society has entered the securitisation market for the first time with a £686m issue. The issue is called Friary no.1 and has been given a provisional AAA rating by ratings agency Moody’s. Principality will act as the servicer and cash manager in the transaction, while HML will be appointed as the back-up servicer […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. I appreciate none of us are running a soup kitchen but is it really still appropriate to classify funds by adviser remuneration?

Leave a comment