JUPITER EUROPEAN: Although fund scours our continent in search of the best businesses, it’s firmly focused on global winners
Don’t be fooled by the name. Although Jupiter European scours our continent in search of the best businesses, it’s firmly focused on global winners – companies that dominate their market and are in growth mode.
It’s a formula that has got off to a good start since being introduced in October last year by Mark Nichols and Mark Heslop who were poached from Columbia Threadneedle.
Despite the stock market shocks of March, the fund has delivered a satisfactory one-year return of 12 per cent. Profits that have been made from a £4.5billion portfolio comprising a host of familiar brands – such as drinks maker Pernod-Ricard and sports manufacturer Adidas.
‘The businesses we like,’ says Nichols, ‘have high market share, make good profits, are growing and global in their reach. They’re innovative, possess good branding and have scale.’
These typically exacting demands mean a choice of no more than 200 companies. Currently, the fund is invested in just 37.
‘When we came in, we reshaped the portfolio,’ adds Nichols. ‘At the time, the top-ten holdings accounted for 63 per cent of the fund’s assets. We’ve taken that down to below 55 per cent.’
The portfolio has also been given a massive overhaul with fewer than ten stocks remaining from pre-October last year. Out, among others, have gone German pharmaceutical giant Bayer, semi-conductor manufacturer Infineon (also German) and Norwegian seafood company Mowi.
But the shrewdest disposal was the stake in German payment processor Wirecard. It was the biggest holding when Nichols and Heslop took over from Alexander Darwell – 9 per cent – and it was disposed of in stages over six weeks. The company has since gone into administration with about €1.9billion (£1.7billion) ‘missing’ from its accounts and chief executive Markus Braun having been arrested. Nichols says: ‘There were lots of questions about the quality of the company’s financial reporting. We tried to get to grips with the numbers, but couldn’t satisfy ourselves that it was a business delivering the cashflow it said it was. We therefore decided to get out.’
Its average disposal price of about €130 per share compares with the current share price for Wirecard of less than €0.5.
New positions have been established in French video games specialist Ubisoft – famous for Assassin’s Creed – and Dutch company ASML, which makes equipment essential in manufacturing computer chips. Other semi-conductor-related holdings include Swiss vacuum valve producer VAT Group and Sweden-based Atlas Copco.
‘All three are global leaders in their markets,’ says Nichols.
Although he admits the global outlook is uncertain, he is convinced the concentration on quality businesses will hold the fund in good stead.
‘All investment environments are tricky,’ he says. ‘Our priority is to focus on ensuring the fund is exposed to companies that are likely to deliver the best growth.’
The fund’s ongoing annual charge is 0.99 per cent – and with a dividend payout of 0.1 per cent a year it is not suitable for income investors.
A report this month by wealth manager Hargreaves Lansdown described the fund as a ‘good option in the Europe sector’. But it added that there were better choices – the likes of Crux European Special Situations and Barings Europe Select. But Jupiter European (stock market identification code: BF154M8) makes it on to FundCalibre’s list of ‘elite’ funds.