Square Mile has downgraded its rating on Richard Buxton’s Jupiter UK Alpha fund over concerns about its declining assets.
In its latest Academy of Funds ratings round-up, the research and consultancy firm said the rating on Buxton’s (pictured) fund had been dropped from AA to A.
It said while its analysts continue to recommend the fund and believe the manager’s “patience and tenacity” to be important attributes, a sustained decline in its assets under management over the medium term, combined with their current level of conviction, meant an A rating is more appropriate.
According to its latest factsheet for the end of June, Jupiter UK Alpha had £837.7m in assets, less than half the £2.1bn the fund had in June 2018 when TA Associates acquired Merian Global Investors, which was later bought by Jupiter.
Fundcalibre and RSMR are more positive
But other ratings groups are more positive on the strategy. The fund remains Elite rated by Fundcalibre while RSMR recently reinstated its rating.
Fundcalibre senior research analyst James Yardley said: “Outflows have been a slight concern but they have stabilised in recent months and performance, importantly, has held up. The fund is still second quartile over Richard’s tenure and a decent size. We continue to rate it.”
RSMR’s research team put Jupiter UK Alpha under review in November 2020 as it didn’t meet its rating criteria, but it re-added its rating in July after meeting with the manager.
A research note seen by Portfolio Adviser, published after the meeting, said: “This fund, with its blend of value and growth stocks, has gone through difficult periods when one style or the other has been in the ascendancy but in the longer term, the blended style reaps rewards.”
It said Jupiter UK Alpha can be “used as a core holding, providing UK large cap stock exposure within a portfolio”.
Square Mile removes A rating from Invesco Global Targeted Return
Elsewhere, Square Mile has removed its A rating from the Invesco Global Targeted Returns fund following an extended period in which returns have fallen considerably short of the fund’s target.
It noted the recent announcement that David Millar, one of the original three architects of the strategy, will shortly step down as a named portfolio manager following a similar announcement about co-founder David Jubb at the end of last year.
“The combination of disappointing performance and changes to the team has undermined Square Mile’s conviction to the extent that the analysts feel the fund’s A rating can no longer be justified.”
The fund, which only last year was the biggest in the IA Targeted Absolute Return sector at £6.7bn, has seen assets continue to shrivel with redemptions refusing to let up. Assets in the fund currently stand at £2.5bn, according to Trustnet.
See also: End of an era for mega absolute return funds as investors pull billions during Covid crisis
