Jupiter multi-asset expansion could prompt Merlin fee pressure

FTSE 250 asset manager nabs second JPMAM hire

Jupiter

Jupiter Asset Management’s latest multi-asset hire has prompted questions about how the team will sit alongside the existing multi-manager range run by the Merlin team.

The FTSE 250 fund house revealed on Monday it has appointed Mark Richards as a strategist to join Talib Sheikh’s multi asset team.

Like Sheikh, Richards joins from JP Morgan where he spent three years as a multi-asset strategist, having previously held similar positions at Pimco and Credit Suisse. Sheikh joined the firm last June after 20 years at JP Morgan Asset Management.

In his newly-created role, he will focus on the Jupiter Flexible Income fund, which launched in September 2018. His focus will be to identify key market themes and formulate them across Jupiter’s multi-asset portfolios.

Portfolio Adviser understands the multi-asset team will expand its range over time.

Sheikh said Richards’ equities experience will complement fixed income and convertible bond specialists Rhys Petheram and Lee Manzi.

Lines between multi-asset and fund of funds blurring

But the expansion of the multi-asset team has prompted questions about how it will differentiate itself from the existing Merlin team.

The Merlin team “often acts more like a multi asset team”, Ben Yearsley, director at Shore Financial Planning, told Portfolio Adviser. “They often take big positions in gold, and effectively have their own property fund, so add that to bonds and equities and it’s basically multi asset.

If the multi-asset fund outperforms Merlin, that could prompt changes to fund fees given the multi-manager range faces a double layer of charges, says Yearsley. “They’ve never been the cheapest on the market.” However, he acknowledged fund of funds are targeted as a standalone product whereas multi asset funds often sits alongside other funds and investments.

The ongoing charges figure on the Merlin Growth Portfolio is 2.37% for the accumulation share class or 1.62% for institutional investors. The OCF for the Flexible Income fund ranges between 0.75% and 1.47%.

The Jupiter Merlin range has been a source of outflows in recent trading updates. Jupiter did not wish to comment on the comparability of the multi-asset team and the Merlin range.

Ryan Hughes, head of active portfolios at AJ Bell, said: ‘The lines between multi-asset investing in direct equities and bonds and those investing in third party funds have become blurred in recent years as in some instances they funds are trying to achieve similar objectives, albeit via a slightly different route.

“As a result, it is fair to compare the two different approaches, albeit, on the understanding that the method of implementation is different and of course the fee structure may well be quite different.”

Multi-asset as an alternative investment

However, Yearsley explained that Jupiter has always been a collection of competing individual boutiques with no house view. “It might seem strange having competing products, but it has always worked for them and has driven them to where they are today so this is just an extension of that.”

Hughes added that it is plausible that some investors who look at multi-asset funds are unlikely to use multi-manager funds as they classify the multi-asset vehicle as an alternative investment, “like many investors have done with the Standard Life Gars fund historically”.

In July, the Merlin term launched the Real Return fund, which sits in the IA Targeted Absolute Return sector.

Stephen Pearson, CIO, said: “We have been greatly encouraged by Talib and his team’s strong start and the early traction we have seen with clients. We are pleased to have attracted someone of Mark’s calibre to the company.

“As well as recruiting new talent we also pride ourselves on our ability to nurture internal talent by developing fund managers from within our existing investment team. Joseph has proved himself as a talented analyst and we are delighted to have the opportunity to extend his role to assistant fund manager.”

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