Direct-to-consumer investment platform Tillit has published, for the first time, a list of funds it is considering removing from its buy list. One of the reasons this caught our eye is that the company has expressed concerns about Jupiter Strategic Bond - the most popular strategic bond fund in our database.
Jupiter Strategic Bond has long been a popular one among the DFMs we cover and this remains the case today, with six allocators holding it.
It is certainly true this fund had a difficult 2022, coming close to the bottom of its admittedly very diverse sector.
Tillit's concerns seem to be centred around the fact the fund, which is run by Ariel Bezalel and Harry Richards, takes an unconstrained approach combined with high-conviction topdown views held by the manager and the fact that, by the managers' own admission, they got certain positionings in the fund wrong recently.
This, Tillit concedes, is not too dissimilar from other strategic bond funds but it raises particular concern about Jupiter's lack of a long track record and as a result its inability to demonstrate long-term outperformance potential.
Bezalel and Richards are certainly bearish. At a time when there is increased talk of a potential soft landing, the duo recently published their outlook for 2024 which maintains their central thesis remains that major developed market economies are going to see a material slowdown and, most likely, a recession.
Incidentally the managers of Allianz Strategic Bond, which is the second-most popular strategic bond fund in our database, also have a global recession as their base case scenario and say they are positioned "very defensively".
At a time when investment outlooks for the coming 12 months are everywhere to be seen, it is important to remember that reasonable people can disagree on the outlook for the global economy.
But we can't help but wonder if Tillit's concern is aimed at exactly the thing which the allocators in our database like about Jupiter Strategic Bond: that it is led by a relatively experienced manager making strong calls (for all Tillit's concerns about track record, Bezalel has been running this fund since 2008).
As RSMR, one of the allocators in our database which holds the fund, said: "Throughout the manager’s tenure, he has sought to maintain a balance between macro and credit focused risk. The unconstrained approach affords the
manager the flexibility to dynamically manage these exposures through the economic cycle."
