The board of the Jupiter European Opportunities investment trust is looking into following Alexander Darwall as he makes a surprise exit from the FTSE 250 asset manager.
The European equities manager is leaving Jupiter to establish Devon Equity Management. He had told Jupiter he wanted to “fulfil a long-held ambition to launch a small investment management business”.
In a regulatory filing published on Monday afternoon, Jupiter said it had reached an agreement with Darwall that he would not compete with it in the Ucits market for a period of two years.
However, the Jupiter European Opportunities trust filed a regulatory update 20 minutes later indicating it would stick by Darwall. The board has instructed its professional advisers to assist in due diligence on Devon Equity Management and to consult with its shareholders.
The RNS also said it was in negotiations with Jupiter regarding ongoing management arrangements and the investment management contract.
Jupiter had already announced in April that Darwall would be stepping back from his open-ended funds to focus on the investment trust.
At the time it announced Mark Nichols from Columbia Threadneedle would take over on the £5.3bn Jupiter European fund and the £2.4bn Jupiter European Growth Sicav. Nichols joined the firm on Monday and will be joined in the European equities team by his former Columbia Threadneedle colleague Mark Heslop in September.
Investment trust would give Darwall critical mass
“This a huge loss for Jupiter,” said AJ Bell head of active portfolios Ryan Hughes.
“But equally when he said he was stepping out from the open-ended side of things getting the guys from Threadneedle was a good move and they’re very well regarded,” Hughes said.
“They managed to get that in place quite quickly but Darwall is one of the shining lights at Jupiter.”
It was possible investors could follow Darwall from the open-ended funds at Jupiter to his new boutique, but it would mean changing structure to a closed-ended fund, he said. “That’s something that’s possibly become a lot more palatable in the last few weeks,” he said in reference to the suspension of Woodford Equity Income due to liquidity mismatch between the daily dealing fund and its underlying assets.
Woodford was also a topical reminder that investors must check risk and governance is in place when a fund manager leaves to set up a boutique, he added.
The European Opportunities trust, which has a market value of £977.5m, would provide Darwall enough critical mass to get off the ground, he said. Henderson European Focus and Fidelity European Values would be the main rivals in the investment trust sector, although Hughes said Darwall’s quality/growth approach was quite unique in the European equities space across both open-ended and closed-ended funds.
Jupiter European Opportunities performance
|Jupiter European Opportunities||12.43||79.97||100.72||610.35|
|FTSE World Europe ex UK index||8.98||48.02||52.90||175.96|
|IT Europe sector||-1.31||45.31||44.57||228.67|