Jupiter income trust manager Tony Nutt says the fund’s performance suffered after he went defensive too early.
The £4.2bn fund celebrates its 20th anniversary this month and has long been an IFA favourite.
Over the first eight months of this year, it returned a loss of 2.07 per cent compared with a 4 per cent rise in the FTSE All Share index.
Nutt says he decided to sell all his mining stocks in the middle of May last year after a market correction saw the FTSE 100 fall by 9.4 per cent in just nine days.
Mining stocks have since bounced back, particularly players such as Antofagasta, up by 44 per cent, and BHP Billiton, up by 53 per cent.
The top five mining stocks have buoyed the FTSE 100’s performance. However, despite appetite remaining strong, a number of mining companies have issued results that have disappointed the market.
Nutt says: “Their costs are rising sharply and although it is still possible to sell lowerquality ore profitably when prices are high, it will be a harder process to reverse when commodity prices fall.
“In retrospect, I sold early but it is always better to sell too early than too late. There is little room for failure in areas like copper, where one company missed its forecast by 40 per cent.
“A super-cycle for mining stocks has been priced in and I believe that issues with mining stocks are now starting to be brought out following the July shake-up.
“The last mining stock that I sold was Lonmin at £43. It has since dropped by some 30 per cent to £31.”
Hargreaves Lansdown senior adviser Ben Yearsley says: “Tony’s long-term performance proves he is a top-class manager. It was a perfectly logical reason to move out of mining but some firms continue to pull out good results.”
For full interview, see next week’s issue