Speaking at a recent press event, the head of Jupiter’s £5.8bn multi-manager range said tensions between president Trump and Chinese leader Xi had grown so bad he wouldn’t be surprised if the conflict became “the new Cold War”.
Asked what a US/China Cold War would look like, Chatfeild-Roberts said: “I probably won’t be alive when it ends. All you have to do is read the history books and see how these things play out.”
“The question is if the geopolitics get ahead of the economics,” he continued. “The worst thing would be someone trying to take preemptive action. We do worry about things like war because war is very bad for investors generally speaking at the outset and then you get people making money out of it afterwards.”
Brexit is a sideshow
He is far less concerned about the impact the UK’s protracted divorce from the European Union is having, noting that the British economy is “carrying on” in spite of the negative headlines and political gridlock in Westminster.
“Brexit is important for this country in some respects but economically, and therefore as an investor, it’s a bit of a sideshow.”
Chatfeild Roberts said Jupiter Merlin product specialist Alastair Irvine “religiously counts the cranes” from the eighth floor of the Zig Zag Building where the multi-manager team resides. “Currently, we’re at 63 which I think is an all-time high. The point being that, actually, economically life is carrying on and it’s carrying on really quite nicely.”
But Brexit has created opportunities for value managers like Jupiter’s Ben Whitmore, whose fund Chatfeild-Roberts invests in, with the valuation disparity between value and growth stocks looking “higher than it has ever been”.
Holding out for Whitmore’s value
The Merlin portfolios are currently tilted toward growth-orientated investors like Findlay Park American, Fundsmith Equity and Evenlode Income. The main value plays are made through Whitmore’s Jupiter UK Special Situations and Jupiter Global Value funds.
Chatfeild-Roberts is still holding “goodly amounts” of Whitmore in case the situation reverses, and value starts to outperform growth, but he said its “possible” a mean reversion might not happen.
Jupiter Merlin fund manager David Lewis, who was also speaking at the presentation, noted that quality growth companies, like the Faangs, have stronger balance sheets than they have had in the past and are lower beta compared with value names.
Jupiter UK Special Situations ranks in the second quartile of the IA UK All Companies sector over three and five years.
While it has performed better than other value funds over the last decade, a notoriously tricky period for the investment style, this year Chatfeild-Roberts admits performance has been shakier. Jupiter UK Special Situations has returned 0.1% over three months versus the sector’s 4.4%, according to Trustnet.