Jupiter Financial Opportunities - Fund update

It has been a turbulent time for many financial stocks lately and Philip Gibbs and Guy de Blonay, managers of the Jupiter Financial Opportunities fund, have been adopting a cautious stance. Whilst recent earnings news has generally been positive, the managers are concerned that the impact of fiscal austerity in Europe is only starting to filter through to the wider economy. Additionally, they believe the outlook for the US is looking more difficult with spending restraints at a state level starting to take their toll.

Much of the fund is therefore focussed on areas where Philip Gibbs and Guy de Blonay see greater strength and growth, specifically emerging markets such as Brazil, Russia and China and selected Western countries such as Norway. They particularly favour DnB Nor, a Norwegian bank that reported strong lending growth earlier this year and has plans to expand its Asian business. The managers also favour Citigroup and Standard Chartered due to exposure to Asia as well as certain Turkish banks.

Their cautious viewpoint has also been reflected by a high cash weighting of over 30%, a position they wanted to maintain until they saw signs of market sentiment improving. Indeed, they are able to restructure the portfolio quite rapidly, and in the last month they have already begun to reduce cash exposure. In the past Philip Gibbs has tended to generate returns for investors by concentrating on getting the big calls right – being invested in the market when it is rising and sheltering capital at the right time. However he won’t always make the right calls. In recent months markets have been volatile but trading in a relatively narrow range. Therefore his strategy has been to await signs of a clear sentiment change before investing further. Shorter periods don’t necessarily reflect this ‘big picture’ strategy, but his long-term record with this fund is impressive, turning £1,000 into £8,271 since launch in 1997*. Please note past performance is not an indication of future returns, and this is a concentrated portfolio of shares invested in a single area of the market which means it is higher risk.

The recruitment of Guy de Blonay to the fund should also be viewed as a positive. In January he re-joined Jupiter after a successful period managing the New Star Global Financials Fund. In June he was named as co-manager having worked alongside Philip Gibbs during his first spell at the company. Guy de Blonay is now involved in the day to day running of the portfolio, and is influential in decision making. Although Philip Gibbs has rightly become renowned in the industry, Guy de Blonay should not be underestimated. He brings some additional medium and small company expertise and is a well respected manager in his own right. We believe the combination is a force to be reckoned with and the fund remains on our Wealth 150 list of favourite funds in each sector.

*Source, Lipper Hindsight 02/06/1997 to 02/08/2010