Jupiter’s Slendebroek disputes reliance on Merlin

Jupiter’s Slendebroek disputes reliance on Merlin

Jupiter chief executive Maarten Slendebroek has insisted the firm’s attempts to diversify revenue streams mean it is no longer so reliant on John Chatfeild-Roberts’ Merlin multi-manager range.

The FTSE 250 fund house’s annual results, published this morning (February 29), showed net inflows of £1.9bn, beating consensus forecasts and pushing AUM past the £35bn mark.

Much of this growth came from the firm’s European equity and flexible fixed income offerings as it expanded into continental Europe.

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However, broker Panmure Gordon responded to the figures by issuing a ‘sell’ rating on the firm, saying Jupiter’s AUM and profits were overly reliant on the Merlin range.

Panmure equity research analyst Jeremy Grime said: “The high margin of the Jupiter Merlin funds, which we estimate account for around 25 per cent of AUM and perhaps 40 per cent of profits may well come under pressure in the coming years.”

But Mr Slendebroek told Investment Adviser the firm had diversified away from Merlin, to the extent that its fixed income business now rivalled the multi-manager range in terms of size.

“If I look at the percentages allocated to sectors, the Merlin sector importance to Jupiter peaked in 2012 and has in a relative sense come down gradually since,” he said.

“We built up [fixed income] very strongly, which went from near zero to a significant percentage [of our business], similar to the size of Merlin.”

Mr Slendebroek added that returns on the Merlin range were continuing to improve following a period of underperformance.

On the subject of the FCA’s asset management market study, which is expected to take a closer look at fund fees, the chief executive said the outcome was impossible to predict given the industry’s lack of experience with a competition review.

Jupiter is currently in the process of submitting “reams of data” to the regulator, he added. Investment Adviser reported earlier this year asset managers were bracing themselves for onerous data requests as part of the watchdog’s study.

“It is going to be a test case for international markets,” Mr Slendebroek forecast. “If I had done a competition review three or four times before I would say what I think would happen, but we have never done this before, so it would be reading tea leaves if I started to speculate.”

In the meantime, Jupiter plans to continue to diversify away from the UK retail market. Though it is launching Jason Pidcock’s Asian Income fund this week, other plans include taking its Absolute Return and UK Growth strategies to European clients.

The fund house is also set to launch a “diversified ecology fund”, with an equity component to be run by Charlie Thomas and bond exposure managed by Rhys Petheram.

Mr Slendebroek said: “We are combining the two ideas to have a balanced green fund for bonds and equities, with Rhys doing the former and Charlie and team the latter. We think we can broaden the appeal and expand our franchise in this area. We have had the ecology funds for 27 years and it is something Jupiter is doing well. And slowly, after all these years, it’s coming into fashion.”