Fund Review: Jupiter Financial Opportunities

This article is part of
Fund Review: Financials

This £479m fund was launched in 1997 with the aim of achieving long-term capital growth through investing in a concentrated, international portfolio of primarily financial services firms.

Guy de Blonay, who was appointed lead manager in January 2011, explains that the fund has a global mandate with the ability to exploit opportunities on a geographic basis from the US to emerging markets. “The aim is to make sure we allocate capital as efficiently as possible in different parts of the world without being constrained by benchmarks,” he says.

“If we don’t believe a country offers any real attraction from a top-down basis and that the macroeconomic prospects of that nation are in decline, we would have to be very convinced to be exposed to a stock in that country.”

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The macroeconomic environment is a key part of the process, with the manager looking at the global economy and identifying themes that could be a factor, such as changes to the US interest rate cycle. Once the macro view is completed, the bottom-up analysis of the financial sub-sectors begins with a focus on three thematics.

Mr de Blonay explains: “It is very much linked to sub-sector analysis. The first portion of the portfolio is restructuring stories – special situations. The second-third [portion of the fund] is yield companies – those that offer an income story – while the third-third is growth companies.”

The restructuring story section of the fund is comprised of firms that are going through key changes, such as a change of management, as seen recently by Credit Suisse, Deutsche Bank and Standard Chartered. “It is companies that have been underperforming, where the shares are attractively valued and generally trade at a discount to book value,” he explains. “They also offer a change in management and/or strategy and therefore we think the shares can rerate.”

Meanwhile, the growth portion can be divided into those companies with exposure to emerging markets and those exposed to disruptive technology. The yield portion of the portfolio tends to be stocks that were special situations, but have now come out the other side and the shares have rerated. The manager describes these firms as ones with transparent and efficient business models that offer strong and sustainable dividend policies.

The fund’s I-accumulation share class has a risk-reward level of six out of seven, while its ongoing charge is 1.01 per cent.

For the five years to July 8 2015, the fund has delivered a positive 28.19 per cent, although this lags the MSCI ACWI Financials index’s gain of 45.67 per cent, data from FE Analytics shows. This is partly attributable to a tough 2014 where the vehicle returned 3.7 per cent against the index’s rise of 9.87 per cent, as it had little exposure to areas that outperformed, such as Australian and Canadian banks. Mr de Blonay explains: “We don’t have a significant weighting to Australia because we want to minimise our exposure to the slowing of China. We thought the slowdown [in China] last year would affect the performance of Australian and Canadian banks, [but] we underestimated the chase for yield.”