Formica on winning back business from the Americans

Formica on winning back business from the Americans

Investment trusts are a British product but many are run by large American firms who have little understanding of them, according to Andrew Formica, the chief executive of Jupiter.

Mr Formica, who took over Jupiter earlier this year, has targeted the investment trust market as an area of growth for Jupiter. 

The company already has five investment trusts and while it does not target large scale acquisitions, further recruitment and some bolt-on deals may be in the works, he said.

He told FTAdviser: "When you think of investment trusts, they are a predominantly British vehicle, and predominantly about active management.

"And when people think of Jupiter, we are a business that is predominantly in the UK, and have a reputation for active management.

"I think there are a lot of investment trusts out there run by American firms that don't understand what they do, trusts with great heritage, and I would hope that we should be there as a place managers think of as a home for investment trusts, we are happy for any trust that might be considering a move to consider us."

Prior to joining his current firm, Mr Formica worked at Henderson Global Investors, which was one of the larger investment trust providers in the UK.

The firm was merged with Janus, a US firm, and Mr Formica subsequently left. 

Jupiter had outflows of £4.6bn in the year to the end of December 2018.

But Mr Fornica said: ”The thing I want to do with this firm in the years ahead is to turn those outflows into inflows, that is what I would like to be judged on.”

Mr Formica’s time at Henderson was marked by a number of significant acquisitions for the firm, which contributed to asset growth.

But he said he does not expect this to be as significant a feature at Jupiter.

He said: “I would think it would be around the recruitment of investment teams that can bring assets with them, and maybe some bolt-on deals, not larger scale activity.

"The best active managers typically return about 3 to 4 per cent a year ahead of the indices, and that I think would get us back to inflows.

"There has been a diversification strategy at Jupiter for a while, in terms of opening new offices and product channels, and hiring new managers, it is not as if we haven’t been doing it, but we want to do it better."

Mr Formica was speaking in the context of the latest results for the company, covering the six months to the end of June 2019. 

The results showed a 16 per cent decline in profits to £81.4m, though outflows were at less than half the previous level, at £1.1bn this six-month period, compared with £2.3bn for the same period in 2018.

Total assets under management were £45.9bn, down from £48.2bn in the same period of 2018.