- We like the manager’s high conviction approach to investing
- Lack of exposure to the mining and technology sectors caused the fund to underperform its benchmark last year
- We would like to see Stephen Mitchell develop a longer track record before considering the fund for the Wealth 150
The Jupiter Global Managed Fund invests in some of the world’s largest companies with no geographical constraints. Stephen Mitchell, the fund’s manager, seeks to invest in businesses with strong balance sheets and franchises, run by good management teams. He tends to favour companies with a history of rewarding shareholders through rising dividends.
Stephen Mitchell took over management of the fund in March 2015 following a disappointing period of performance. He reduced its number of investments from around 280 to 50. We like this high conviction approach because it means each investment has the opportunity to make a sizable contribution to overall fund performance. That said, it is a higher-risk strategy.
While the manager has prior experience investing in global equities, he has a limited track record that we are able to analyse. We would like to see him develop a longer track record at Jupiter before we make an assessment of his fund management abilities. The fund does not currently feature on the Wealth 150 list of our favourite funds across the major sectors.
The fund has delivered an attractive return since Stephen Mitchell took over its management, although it has underperformed the broader global stock market. Please note this is over a short time period and past performance is not a guide to the future.
Past performance is not a guide to the future. Source: Lipper IM to 28/02/2017
The manager’s focus on companies with rising dividends means the fund has had little exposure to the mining and technology sectors. Mining companies cut their dividends last year following a dramatic fall in commodity prices while the largest technology companies such as Alphabet, Amazon and Facebook do not pay dividends. Both sectors performed well last year and the fund missed out on some of the gains made.
In contrast, the fund’s exposure to the US stock market and financial sector provided tailwinds to performance. Standout contributors include financial services company JPMorgan, US oil pipeline provider Spectra Energy and luxury goods company LVMH. Limited exposure to the poorly-performing telecoms and utilities sectors also helped performance.
The manager increased exposure to financials throughout 2016. This decision was underpinned by a number of positive meetings with senior managers at Standard Life, Bank of Montreal and Wells Fargo and he increased exposure to these companies.
Exposure to the oil & gas sector was also increased, which was mainly achieved through an investment in BP. The manager believes its 7% dividend yield is sustainable and will be supported by growing cash flow over the coming years. An investment in Enterprise Product Partners, a Houston-based energy pipeline, storage and processing business with a strong track record of dividend growth, was also added to the portfolio. The company could stand to benefit from the expansion of oil shale fields in the US.
Elsewhere, the manager took profits from some strongly-performing investments, including communications and digital entertainment group AT&T. He has growing concerns about the business going forwards given the high price it is paying to acquire media business Time Warner against a backdrop of slowing business growth.
Consumer staples producer Colgate was also sold following slower than expected sales growth in the latter half of 2016.