Jupiter's AUM drops £2.3bn as investors pull out of bonds

Jupiter's AUM drops £2.3bn as investors pull out of bonds

Investors turning against bond investments contributed to a £2.3bn drop in the assets under management (AUM) of Jupiter in the six months to 30 June.

The company’s AUM was £48.2bn at the end of June, representing a fall of £2.3bn.

This is precisely the amount of the total outflows from the Jupiter Dynamic Bond fund during the period.

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Many asset allocators have been wary of the case for investing in fixed income assets due to concerns over rising interest rates.

A higher interest rate generally means the price at which many bonds trade falls, because investors, rather than buying the existing bonds, wait for new bonds to be issued that reflect higher interest rates.

US interest rates have risen several times in 2018. In the UK, the market is currently pricing a 90 per cent chance that rates rise in August.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said the central bank may put rates up to give it the freedom to put them back down again if the outcome of the Brexit negotiations proves to be a no deal scenario and economic disruption.

The Jupiter Dynamic Bond fund is managed by Ariel Bezalel, and attracted more than £3bn of inflows last year, but it produced a negative return for investors this year.

The AUM figure was better than had been expected by the wider market, which had anticipated assets of £47.8bn.

The company’s management fees rose by 7 per cent in the period.

The company’s profit before tax was £96.5m.

Maarten Slendebroek, chief executive of Jupiter, said: "The first half of 2018 reflected a more challenging operating environment against a more volatile global geopolitical backdrop.

"Despite net outflows in the period, it was clear our resilient business model and strong balance sheet continue to deliver for all our stakeholders."

He added: "In 2018 we reaffirmed our strategy of delivering active outperformance for our clients through a diversified operating model based on a culture of accountability, high performance and independent thinking."