‘Revealed: Britain’s best fund manager’ proclaimed the Mail on Sunday in 2006; ‘The shy man with a deft touch’ read The Daily Telegraph in 2007; ‘Philip Gibbs: Jupiter’s shining star’ from the same paper in 2010.
More up-to-date cuttings were absent, though that owes much to the struggling fortunes of the £536m Jupiter Absolute Return Fund, which has underperformed the IMA Targeted Absolute Return average since launch in 2009.
As head of Jupiter’s financial team, he sailed through turbulent waters following the global financial crisis before standing down as lead manager on his Financial Opportunities Fund to Guy de Blonay in 2010, and passing on International Financials Fund to Robert Mumby in 2011.
In good company
Gibbs may well leave fund management on the back of a difficult last leg of underperformance. However, the same can be said of other retiring luminaries, including his Jupiter colleague Anthony Nutt and indeed the most celebrated fund manager of his generation, Anthony Bolton of Fidelity.
Gibbs arguably shares a similar stature to Bolton during his long career, and maintains a reputation for making the right macro calls at the right time and sticking by his convictions. In November 2007, he took positions in long-dated government bonds and hiked up cash weightings – at one point cash made up half of his portfolio – and so in 2008 he produced a full-year positive return of 7.25%, against a backdrop of a financial meltdown.
“In 2008 into 2009, the Jupiter Financial Opportunities Fund was the best performing fund over 10 years and despite the nature of his fund he avoided much of the problems of many of the banks showing great insight,” recalls Adrian Lowcock, senior investment manager at Hargreaves Lansdown.
Bearish view
“Gibbs’ reputation was at a high going into the launch of the absolute return fund, but he has maintained a very bearish view on the global recovery and global economics. It’s fine to have that view, but he hasn’t been executing strategies, instead sitting heavily in cash and effectively waiting for the market to reflect his view. While he hasn’t really lost investors any money, he hasn’t made any money for them either.”
To use an investment truism, past performance is no guide to future returns. Or, to borrow an old football cliché, you’re only ever as good as your last game. With this in mind, investors who stick with Jupiter Absolute Return under new manager James Clunie will also question whether the fund should maintain its performance fee (15% of outperformance above its benchmark).
As demonstrated by Bolton’s performance in recent years, big named fund managers shouldn’t necessarily warrant big performance fees. Though that’s a story for another day…
