Jupiter plans launches as Darwall swipes virtually all trust assets

European equity manager’s exit set to take big chunk out of £1.2bn range

Jupiter nabs Steve Cohen hedge fund alum for long/short launch

Jupiter is planning investment trust launches as European equities manager Alexander Darwall prepares to swipe virtually all assets from the range when he creates his own firm.

Magnus Spence (pictured), currently head of alternatives, will become head of investment trusts replacing Richard Pavry, who will exit in November.

The company is looking to “further develop this key business area”, it said in a press release announcing the appointment. A spokesperson confirmed that meant trust launches.

Jupiter Emerging & Frontier Income Trust, launched for Ross Teverson and Charlie Sunnucks in 2017, is the most recent addition to the range, which for now consists of five trusts.

Jupiter trust range dominated by Darwall

Jupiter currently runs £1.2bn worth of investment trusts but Darwall’s European Opportunities Trust represents £897.4m, according to FE Analytics. He is due to take the mandate with him when he establishes Devon Equity Management – a move scheduled to take place in November.

The board of the £44.7m Jupiter UK Growth Investment Trust is also considering whether to change to another fund management company, according to the annual report published at the start of October. Since changing to a growth mandate in April 2016, Steve Davies’ trust has underperformed its benchmark by 34.3%.

Chief executive Andrew Formica said investment trusts were comparable to Jupiter in being “a particularly British proposition”. Formica said the fund structure suits Jupiter’s active investment approach.

Janus Henderson, the business Formica formerly co-headed with Dick Weil, had a much stronger investment trust stable with 13 products representing £6.9bn, according to FE Analytics.

Alternatives a growth area in investment trusts

Spence will remain head of alternatives alongside his new appointment. 

In a press release, he said more investment trusts are looking to alternatives as a source of income as yields on traditional cash and bond asset classes remain low.

Tilney managing director Jason Hollands said it is right to identify alternatives as a key area of growth in the investment trust space.

Hollands said: “There have been very few vanilla, long-only equity trusts launched in recent years, but a healthy flow of trusts invested in areas like private equity, property and more esoteric asset classes, where closed-end structures are more appropriate given liquidity considerations. In time this may well herald an appetite for renewed product innovation within its investment trust business.”

All Jupiter’s existing trusts invest in equities.

Association of Investment Companies communications director Annabel Brodie-Smith could not name any other head of investment trusts who is also head of alternatives but she thought the dual roles made sense. Investment companies investing in alternatives have almost tripled over the last decade thanks to demand for income and the suitability of the closed-ended structure for illiquid assets, Brodie-Smith said.

Growth in alternatives versus other types of investment companies over the last 10 years

200920142019
Equity£47.7bn£74bn£112.4bn
Alternative£30.9m£39bn£80.4bn
VCT£2.1bn£3.1bn£4.6bn
Source: AIC/Morningstar

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