Jupiter’s open-ended funds will no longer invest in unquoted companies, according to a letter addressed to its shareholders, with the firm having reached an agreement to finalise the drawn-out sale of Starling Bank.
The FTSE 250 company signalled its intention to sell Starling in August last year, and holds the private company across a few of its funds. It was the largest holding in Jupiter’s embattled UK Mid Cap fund at the end of last year, accounting for 6.9% of portfolio assets.
However, in the letter, CEO Matthew Beesley (pictured) said that investor sentiment towards holding unlisted assets in open-ended funds had changed, citing the market volatility that has characterised the last few years.
Beesley went on to confirm that Jupiter’s open-ended funds would not open any new investments in unquoteds, adding: “While we do still retain very small stakes in a minimal number of other unlisted assets, we will prudently manage these exposures over time with a view to generating maximum value for our clients.”
Sheridan Admans, head of fund selection at Tillit, said that Jupiter’s decisions to sell its stake in Starling and no longer buy unlisted assets for its open-ended funds were long overdue.
Citing the Woodford Equity Income Fund debacle, in which investors were stranded in the illiquid strategy while valuations plummeted, Admans said that Jupiter investors have been “left in the dark”, worrying if their money is at risk of going the same way as it did for investors in Neil Woodford’s fund.
“There is no place for unquoted stocks in an open-ended fund,” he concluded.
Admans argued that investing in private and unlisted illiquid assets is best left in the hands of the closed-ended funds.
On 7 February, the same day the letter was dispatched, Chrysalis Investment Trust announced the purchase of £20m of equity in Starling via a secondary market transaction.
The sale’s completion will bump Chrysalis’ holding in Starling from 13% of the portfolio, to 15%, and the trust’s investment adviser said it was “optimistic” about the prospects for the bank.
Due to some stark write-downs, Starling was by far the largest weight on Chrysalis’ sliding net asset value (NAV) last year, with falling valuations in unquoteds such as Klarna also harming the trust.
Chrysalis’ share price has dropped by 57% over the last 12 months, and appears to be heading south again after staging something of a recovery from October’s low.