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Jupiter Merlin steps back from emerging markets

Jupiter’s Merlin multi-manager team has scaled back its overweight to emerging markets, which has hampered its funds’ performance over recent timeframes.

John Chatfeild-Roberts, Peter Lawery and Algy Smith-Maxwell admit emerging markets had “a tough time” in 2013 as investors fled the asset class in light of weakening economic growth and the prospect of tapering by the US Federal Reserve.

All of the five Merlin funds aside from Jupiter Merlin Growth underperformed over one year to 2 January 2014, according to FE Analytics.

In September last year, Chatfeild-Roberts said this underperformance was partly due to an overweight in emerging markets, particularly Asia and Latin America, but highlighted the funds’ outperformance over the long term.

In their latest investor update, the Merlin team says: “We have taken a prag-matic approach to our asset allocation and decided the risks are too great for us not to cut back our exposure to an area of the world which is going through a cyclical slowdown and which is vulnerable to a reversal in US central bank policy.”

One of the positions trimmed in the move is Angus Tulloch and Alistair Thompson’s £6.4bn First State Asia Pacific Leaders fund, which has seen its weighting cut from 7.9 per cent to 4 per cent in the £1.9bn Jupiter Merlin Growth Portfolio and from 10.9 per cent to 5.5 per cent in the £816m Jupiter Merlin Worldwide Portfolio.

Hargreaves Lansdown investment analyst Richard Troue says: “We are generally positive on emerging markets over the long term but over the short term we see some issues, so this is probably a sensible move.”

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