View more on these topics

Jupiter orbits Japan

Jupiter Asset Management

Japan Select Fund

Type: Sicav

Aim: Growth by investing in Japan and other Asian countries

Minimum investment: Lump sum £1,000, euros 1,000, $1,000

Investment split: At least 100% in Japanese equities, up to 20% in other Asian countries and government bonds

Place of registration: Luxemburg

Charges: Initial up to 5%, annual up to 1.5%

Commission: Initial up to 5%, renewal 0.5%

Tel: 020 7314 7600

Jupiter’s Japan select fund aims for growth by investing mainly in Japanese equities. The portfolio will comprise 40 to 55 stocks diversified across sectors and is benchmarked against the Topix index. Fund manager Simon Somerville will have the flexibility to invest up to 20 per cent in other Asian regions, including Hong Kong, Taiwan and Singapore, and in government bonds.

Chadney Bulgin partner Bruce Bulgin says: “This is a straightforward stock picking fund with no currency hedge aimed at investors with a fair degree of risk tolerance and is no worse for that. It is structured as a Luxemburg Sicav.

Bulgin notes that the fund manager has been with Jupiter since 2005. “Simon Somerville has a great deal of experience and also runs the Jupiter Japan income fund and the Japan portion of the global managed fund,” he says.

Somerville takes a bottom-up approach to stockpicking using the GARP approach. “GARP stands for growth at a reasonable price. In other words, buying stocks with growth potential which are not overly priced. In this case there is no preset price bias but the emphasis is likely to be on small to medium-sized companies,” says Bulgin.

Typically there will be 40-55 stocks in the fund and there is also a risk management process in place. “Somerville believes that the effective way to manage risk is to fully understand the companies in which he is investing – by limiting the number of stocks this process is made less onerous,” says Bulgin. He adds that Somerville’s previous track record in Japan has been above average and that the Jupiter Japan income fund has outperformed by a significant degree.

“The new fund is billed as investing in Japan, but the remit means that up to 20 per cent of holdings can be in other Asian companies and also in government bonds. There is the option to enter into derivative transactions but only for hedging and tactical asset allocation, and not for speculative purposes,” says Bulgin.

He feels that a major attraction of the fund is the sheer amount of flexibility enjoyed by the fund manager, coupled with his own track record managing Japanese equities.

Turning to the less appealing features of the fund Bulgin says: “Hardly anyone has made money by investing in Japan and even though there have been rallies, the main Japanese stock indices have delivered negative returns for years. “

Bulgin mentions that Japan itself is contracting in economic terms as the world shuns its products. “However, the domestic economy is holding up well and Japan’s banks have a lower exposure to credit problems that their counterparts in the West,” he says.

Bulgin wonders whether there will be much interest in the new fund against this backdrop. “There is a move towards asset allocation so Japan will only occupy a small proportion of most portfolios. In an increasing number of cases disillusioned advisers are opting for low cost trackers and exchange-traded funds, making the more expensive actively managed funds less popular.” he says.

The lack of currency hedging may be another issue in Bulgin’s view, but over the past year sterling has fallen against most other currencies and Jupiter believes that the Yen will be viewed as a safe haven currency.

Identifying funds which will provide the main competition Bulgin says: “Competition will come from other actively managed funds such as those offered by Schroders, Fidelity and Invesco Perpetual.” He thinks tracker funds and ETFs could also compete.

Discussing the charges, Bulgin thinks they are reasonable for a fund of this type. “The annual management charge is probably a little below average, while commission is standard, as is the initial charge. Again this is becoming more irrelevant as advisers increasingly use platforms with unbundled pricing strategies.”

Summing up, Bulgin says: “The track record and credentials of Simon Somerville are first class and Jupiter is a highly respected and successful investment house that rarely latches on to the latest fad. So it is to be hoped that the new fund will perform well in what has become a neglected sector of the market for UK investors.”


Suitability to market: Average
Investment Strategy: Good
Charges: Average
Adviser remuneration: Good

Overall 8/10


Crash caller

In 1997, Fred Harrison wrote to the Government and warned that it had 10 years to try to stop an impending global depression.

Neutral grounds

Last month, we released the initial findings of our third GB Investor Report based on an online survey of over 4,000 retail investors. This shows that, in May 2009, the IMA Investor Confidence index turned slightly positive, with the index indicating that investors on the whole are still neutral about putting money into new investments or increasing existing investments.

A fund in top form

A key issue for many clients remains boosting their income. For many, this has been at least partly satisfied by holding corporate bond funds, which, after a very poor 2008, have come back quite strongly.

Investment Forum

Position Portfolios for a Changing China, Accelerating Disruption and More Political Discourse Is China an asset class? Why Investors’ Understanding of China is Changing How is disruption changing the way we invest? Established Ways of Doing Business Are Being Challenged What to Watch: Why politics matters more than ever in 2017 Key takeaways: Despite volatile […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm