Jupiter still has problems to address in its absolute return fund range despite the exit of James Clunie following a prolonged period of poor performance and outflows from his Absolute Return unit trust.
The multi-asset team, led by head of strategy Talib Sheikh, will manage the fund from 1 January “anchoring the strategy within a team that can draw upon a broader range of capabilities”, said Jupiter head of UK Mark Thomas in an email to investors on Friday.
“Whilst we intend to retain the core proposition of the global, outcome-orientated approach of the fund, we will take this opportunity to review aspects of the investment process and proposition. The fund will continue to be managed to its investment objective by the new team.”
Merian GEAR fund remains a ‘problem child’ for Jupiter
Thomas said the absolute return sector had faced a challenging environment in the past few years. Thomas mentioned the asset manager was keeping its fund range under constant review in line with Jupiter’s assessment of value report, which was published in summer.
“Alongside other similar product offerings, the Jupiter Absolute Return fund (UT) has experienced a period of sustained underperformance against this difficult market backdrop and has seen significant outflows over this time,” Thomas said.
AJ Bell head of active portfolios Ryan Hughes wasn’t surprised Clunie (pictured) has exited. “Arguably this should have been tackled before. The fund has been going down for four years. Its performance peaked in October 2016 and it’s had negative returns in 2017, 2018 and 2019 and then this year we’re going to have another negative return.”
But he added that Merian Global Equity Absolute Return is “another problem child in the stable for Jupiter”. “That fund hit £16bn at its peak and now it’s right down to £1.4bn. It’s got a lot more scale than James Clunie’s fund so that is definitely a plus point for the strategy. But again, investor confidence is a real challenge in absolute return products when you’ve had such a prolonged period of underperformance.”
Tech shorts could be proved right over time
In February, Jupiter had pledged its “full support” for Clunie, who has been with the asset manager for seven years, when his Jupiter Global Levered Absolute Return Sicav was shut due to redemptions.
At the time, Clunie was taking a hammering due to his short on Tesla, which has seen its shares rise almost seven fold during the course of 2020.
In November, Portfolio Adviser reported the fund’s assets had dwindled to £180.4m from £1.2bn at the start of 2020 on the back of poor performance and £791.9m in net outflows.
Hughes said Clunie may well be proved right over time that tech and growth are massively overvalued. “We might be able to say in a year he was absolutely spot on. But the problem is the market can stay irrational a lot longer than you can stay solvent.”
Jupiter Absolute Return fund
| 1m | 3m | 6m | 1yr | 3yr | 5yr | |
| Jupiter Absolute Return | 6.73 | 1.88 | -4.46 | -17.34 | -22.49 | -16.38 |
| Libor GBP 3 Months | 0.00 | 0.01 | 0.04 | 0.35 | 1.88 | 2.76 |
| IA Targeted Absolute Return sector | 2.56 | 2.21 | 4.07 | 2.70 | 2.63 | 6.72 |
Source: FE Fundinfo
See also: Jupiter’s Phil Wagstaff unfazed by absolute return issues ahead of Merian takeover
Jupiter also reveals fund manager changes in multi-asset and UK equities
Additionally, Jupiter Distribution & Growth fund manager Alastair Gunn will be leaving the firm after 13 years.
Thomas said multi-asset had become a strategic focus for Jupiter and the funds would be handed to Sheikh, who will work closely with Rhys Petheram and the UK equity team in managing the underlying asset class sleeves as part of an overall multi-asset solution.
