Hot on the heels of two of its funds being dropped from Bestinvest’s buy list, Jupiter Fund Management has been dealt a further blow after Fitch Ratings downgraded the firm’s outlook.
The FTSE 250 fund group is “increasingly sensitive to net fund outflows and market valuations adjustments”, Fitch noted, and it expects Jupiter “to remain under pressure in the current challenging market climate”.
As a result, Jupiter’s long-term issuer default rating (IDR) has been lowered from ‘stable’ to ‘negative’, with the credit ratings agency adding that the high proportion of Jupiter’s AUM that is dedicated to equities also “inherently increases its risk profile.”
“Jupiter has witnessed net outflows over recent years, which continued in 1H 2022 and its retail focus and smaller scale increase its vulnerability to net outflows versus peers. However, Jupiter’s relatively low leverage is a rating strength.”
It has been a tough year for the fund group, which recorded £1.9bn in outflows during the first quarter of this year, with a further £1.7bn walking out the door in Q2. Add to this negative market movements of £8.1bn, and Jupiter’s AUM has been dragged down to £48.8bn at the end of June 2022, a considerable drop from the £60.3bn a year ago.
Fitch added: “Jupiter remains materially smaller and more concentrated than higher-rated peers. Jupiter’s AUM declined by around £12bn in 1H22 through a combination of net outflows and negative market effects.”
Jupiter declined to comment when contacted by Portfolio Adviser.
The news comes just days before chief executive Andrew Formica (pictured) is set to step down after something of a tumultuous time heading up the firm. He was appointed in March 2019 and oversaw the acquisition of rival fund manager Merian Global Investors, a move that has drawn much criticism given the performance of Jupiter’s share price over the past few years.
In May, a former non-executive director and current share holder at Jupiter stuck his head above the parapet and, in an open letter, called for significant changes to turn around the business’ dwindling fortunes – including the removal of Formica as CEO.
Year to date, Jupiter’s share price is down 65% at 92 pence. At its height in January 2018, the firm commanded £6.31 per share.
