Fund picker’s view
Stewart Smith, investment research manager, Rayner Spencer Mills Research
Ben Whitmore has successfully managed Jupiter UK Special Situations for more than 10 years with a value bias, focusing on out-of-favour companies that have strong franchises and balance sheets, and investing in them for the longer term.
This ‘special situations’ style of investing has been out of favour in recent times, with investors preferring quality growth stocks. Whitmore freely acknowledges that his investment approach can suffer periods like this, and he is prepared to be patient, stick to his investment process and concentrate on generating long-term returns.
The fund is particularly interesting at this point in the investment cycle, as there is short-term evidence that his style is coming into favour with investors that are starting to move away from defensive/quality growth towards quality/cyclical value stocks and sectors.
The economic backdrop for value investing has also begun to look favourable, as an environment of rising bond yields, but not necessarily rising interest rates, due to increasing inflation expectations and stable economic growth.
Fund performance has been strong under Whitmore’s tenure and he has performed particularly strongly when conditions have been in his favour.
The fund’s key positions in more cyclical sectors such as consumer services, financials, industrials and basic materials, and away from the defensive/quality growth sectors such as utilities, telecoms and consumer goods, has led to strong performance in the past two months, benefiting from the market’s recent sector rotation.
We anticipate this rotation and outperformance will continue, and Whitmore’s experience and investment process should enable the UK Special Situations fund to be a key beneficiary.
