Darwall's former funds contribute a third of Jupiter profits

Darwall's former funds contribute a third of Jupiter profits

Around a third of the profit before tax posted by Jupiter Asset Management comes from funds managed until recently by Alexander Darwall, who has signalled his desire to leave the company. 

Mr Darwall announced he would step away from managing a pair of European funds in April, and yesterday (2 July) informed his employer he had long wanted to set up his own small asset management business. Mr Darwall has not yet formally submitted his resignation.

He intends to call the new firm Devon Asset Management once it receives approval from the Financial Conduct Authority.

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Since Jupiter announced Mr Darwall's resignation yesterday evening, its share price has fallen 7 per cent to £4.02.

The board of the £1bn Jupiter Opportunities trust, which Mr Darwall manages, has indicated it is considering following Mr Darwall to his new business, subject to due dilligence and shareholder approval.

Mr Darwall has run the trust since its launch in 2000 and in that time the trust has returned 845 per cent, while the AIC Europe sector has returned 293 per cent.

Over the past five years the trust has returned 100 per cent while its sector returned 44 per cent.

David McCann, an equity analyst at Numis Securities, said he did not expect the trust to leave Jupiter until the third quarter of 2020, if it ever leaves at all, because of the regulatory checks involved.

He estimated the trust contributed 3 per cent of Jupiter’s total profits, a figure of £5.1m. The trust also often pays a performance fee to Jupiter.

Mr McCann added that the open-ended funds Mr Darwall managed until April contributed a combined 31 per cent of profit before tax, a total of £52m. 

Those funds will now be managed by Mark Nichols and Mark Heslop, who both joined Jupiter from Columbia Threadneedle. 

Mr Darwall has agreed not to compete with Jupiter in the Ucits fund market for two years. Mr McCann said he assumes there won’t be a significant change in the size or inflows of the two open ended funds that contribute 31 per cent of profit, because it was announced some time ago and because Mr Darwall cannot launch a rival product for at least two years. 

A spokesman for Jupiter said the appointments of Mr Nichols and Mr Heslop had been "well received" by investors and had a "strong track record". She said Mr Darwall would be supporting both of them through the transition.

She added: "Jupiter has been in talks with Alexander Darwall about his future plans. Alexander has told the company that he would like to fulfil a long-held ambition to launch a small investment management business.

"With Jupiter’s agreement, he has taken preparatory steps to do this including making an application to seek regulatory approval from the Financial Conduct Authority for a newly incorporated company.

"Jupiter would like to emphasise that clients’ best interests remain the key consideration in this process. In the meantime, Alexander is fully committed to delivering consistent performance and ensuring a smooth transition of the mutual funds."