Jupiter has been kicked off Alexander Darwall’s (pictured) European Opportunities mandate, as the board follows the lead manager to his new investment business.
The board announced on Wednesday evening it will prematurely terminate its contract with Jupiter, installing Darwall’s firm Devon Equity Management as the trust’s delegated investment manager.
Subject to the completion of a due diligence exercise into the company and securing regulatory approval, Devon will take over from a date in November 2019.
Darwall surprised the market when he announced back in July he would be leaving Jupiter to “fulfil a long-held ambition to launch a small investment management business”. Months before he had said he would be relinquishing control of his open-ended funds, with £8bn in assets, to incoming Columbia Threadneedle manager Mark Nichols.
At the time commentators speculated the European Opportunities board would follow Darwall to Devon Equity Management. But Jupiter’s new boss Andrew Formica seemed to hold out hope Darwall might stick around, stressing to Portfolio Adviser at the time of the firm’s interim results the European manager hadn’t resigned yet.
News of Darwall’s departure was responsible for the majority of Jupiter’s £1.1bn outflows during the first half of the year, with £600m coming out of the asset manager’s European equities products.
Jupiter’s investment trust expertise not in question
Willis Owen head of personal investing Adrian Lowcock said losing the mandate was not a reflection of Jupiter’s abilities and expertise in the investment trust space and is an outcome the FTSE 250 fund group would have prepared for.
“Alex Darwall had an excellent track record at Jupiter and therefore it was always likely that the trust’s board will follow him once he had set up.”
Darwall’s trust has trounced IT Europe peers on a longer-term view, delivering 44% returns against the sector’s 31.3% over three years, and returning shy of 100% over five years, nearly double the sector’s returns.
But over one year performance has been shakier with the fund handing clients a 6% loss.
| 6m | 1yr | 3yr | 5yr | |
| Jupiter European Opportunities | 11.1 | -5.6 | 44.4 | 97.6 |
| IT Europe | 4.8 | -1.6 | 31.3 | 57.3 |
| NAV | 12.5 | 2.5 | 46.9 | 107.0 |
Source: Trustnet
Board scraps performance fee
The European Opportunities board has also proposed that Fundrock would take over as the new alternative investment fund manager (AIFM) on the £966.7m trust. The Ucits management company oversees 500 plus funds across the UK, Luxembourg and Ireland that have over £80bn in assets under management.
The team who would be responsible for acting as European Opportunities AIFM are based in London.
It also announced it would be scrapping the existing management fees with Jupiter.
Presently Jupiter is entitled to an annual base management fee of 0.75% of the trust’s total assets and a performance fee of 15% of the outperformance above its benchmark, the FTSE World Europe ex UK Total Return Index (subject to a high water mark and an annual cap).
But under the new proposals Devon and Fundrock will be paid aggregate management fees of 0.90% per annum on assets under £1bn and 0.80% on net assets over this amount with no performance fee.
The amended fee arrangements will come into effect on 1 June 2020.
Jupiter will continue to be paid the base management fee after termination up until 31 May 2020. It has agreed to waive the performance fee from the termination date.
