Type: Unit trust
Aim: Growth by investing globally in equities, equity-related securities including derivatives, cash, near cash, fixed interest securities, currency exchange transactions, index-linked securities and money market instruments/deposits
Minimum investment: Lump sum £500, monthly £50
Investment split: 100% in equities, equity-related securities cash, near cash, fixed interest, currency exchange transactions, index-linked securities and money market instruments/deposits
Isa link: Yes
Charges: Initial 5.25%, annual 1.25%, performance fee 15%
Commission: Initial 3%, renewal 0.5%
Tel: 020 7314 7699
Jupiter’s absolute return fund aims for returns that are independent of market conditions by investing globally in equities, equity-related securities including derivatives, cash, fixed interest and other securities.
Along with Jupiter’s international financial fund, it was created to allow fund manager Philip Gibbs to make full use of the wider investment powers of Ucits III. More specifically, it will provide retail investors with access to Gibbs’ long and short investment skills, established during the last nine years through running a hedge fund.
Discussing the fund’s market suitability, Hargreaves Lansdown senior analyst Meera Patel says: “This is a fund for all seasons and I would expect it to deliver positive returns in all market conditions. It could therefore form the core of an investors’ portfolio.”
Patel points out that there has been a spate of absolute return funds that have come to the market in the last year. However, she observes that only a handful of these funds have managers with any meaningful track record of shorting or managing a hedge fund. “Philip Gibbs has an excellent track record, having managed a hedge fund, and is the right manager to run a fund like this,” says Patel.
In Patel’s view, Gibbs also has the rare ability to time markets by staying invested during a bull market and staying out of the market when he is bearish.
“Gibbs is well known for his experience in the financial sector. He can play to his strengths when he feels it is appropriate, but he can also invest in other sectors in the equity market, invest globally and invest in to corporate bonds, currencies and cash,” says Patel.
She adds that unlike many other funds in the IMA Absolute Return sector, this is a globally diversified fund rather than focusing on a single country or restricted only to equities and bonds.
Considering the potential drawbacks of the fund, Patel says: “Gibbs is a gifted manager so there is fundamentally nothing wrong with this fund. It is a super proposition and when an investor buys the fund, they are buying the talent that goes with it.
“However, if I had to name one negative feature it would be the performance fee. The fund has an annual management charge of 1.25 per cent, which is lower than some absolute return funds, and a 15 per cent performance fee above the three-month Libor. I can argue that any active fund manager should be able to deliver positive returns in all market conditions,” she says.
Scanning the market for funds that could possibly compete with Jupiter’s, Patel says: “There are currently 36 funds in the IMA Absolute Return sector and Jupiter will compete with them all. Each fund has a different strategy, but they all aim to provide a positive return over a 12-month period. “
However, Patel adds that if there is a one fund that could provide the main competition for Jupiter, it is the Artemis strategic assets fund. “The Artemis fund is in a different sector, but it is globally diversified and invests in a number of different assets,” she says.
Summing up, Patel says: “It is worth bearing in mind that the Jupiter fund could lag the market during a bull market or a sharp market recovery, but I would expect it to weather the storm in more difficult and volatile market conditions.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average