Jupiter’s fund of funds guru John Chatfeild-Roberts has admitted “bad decisions” led to the recent underperformance on his funds, but dismissed fears that the size of the funds had hindered returns.
Mr Chatfeild-Roberts said his Jupiter Merlin range has had “a tricky couple of years” in terms of performance.
The flagship Merlin Income fund has slipped into the fourth quartile of its IMA sector in the past year, while the Conservative and Worldwide Portfolio funds are also behind their peer group, according to data from FE Analytics.
Mr Chatfeild-Roberts said he and his team had “just made bad decisions” recently, but claimed things were starting to turnaround now.
One of the bad decisions the manager cited was the exposure the Merlin funds had to emerging market debt in 2013, when the asset class reacted extremely negatively to the prospect of the US withdrawing quantitative easing (QE).
He also highlighted the lack of exposure to UK government bonds in 2014 as a “drag” on relative returns because gilts have been one of the best-performing asset classes so far this year.
But he said the size of the Jupiter Merlin Income fund, which grew to £4.9bn in 2013, did not affect performance because the team never had any issues with buying or selling underlying funds.
Data from FE shows the Merlin Income fund is top quartile in the past 10 years but drops to second quartile for five years, third quartile in three years and bottom quartile in the past year.
But the Merlin managers said the performance was not correlated to the growth in the fund’s size over that period, pointing out that the underperformance was confined to a 12 month period straddling 2013 and 2014.
Mr Chatfeild-Roberts said he was happy with the investment decisions the team had made recently, particularly to max out the equity exposure on its funds and to get exposure to the appreciating US dollar.
He said he was now “waiting for the market to come back to us”, which he said it had started to do, citing stronger performance figures for the past three months on the Merlin range.
