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Jupiter still in talks over investment trust mandate

Jupiter still in talks over investment trust mandate

The board of the Jupiter UK Growth investment trust is still in talks with the fund manager over its role in managing the trust following a period of poor performance. 

In an update today a Jupiter spokesperson said: “We understand the board’s concerns and are working closely with our client on this issue. As ever, our investors’ best interests are front of mind.”

The issue dates back to early October when in the trust’s half-year report chairman Tom Bartlam wrote: “We are conscious that the company has not achieved the performance that we had hoped for over the past three years.

"This is the result of both the unfavourable macro factors noted above and stock specific issues within the portfolio.

"In my interim statement I expressed the board's frustration at the poor investment performance of the company and regrettably this underperformance has continued in the second half of the year.

"In the review of our strategy, we have been actively engaging with Jupiter Asset Management and our brokers Numis Securities to identify alternative arrangements that could better serve the interests of shareholders.

"These alternatives include the adoption of an alternative investment approach for the company from within the Jupiter group and a potential appointment from another fund management company.

"The outcome of these ongoing discussions will be announced in due course.” 

The Jupiter UK investment trust has returned 0.34 per cent over the past three years, compared with 23.8 per cent for the average trust in the AIC UK All Companies sector in the same time period. 

The trust is managed by Jupiter ‘s Steve Davies. He deploys the value style of investment, which has been deeply out of favour in the market in recent years.

In his comments Mr Bartlam acknowledged that it had given Mr Davies permission to run the trust using this style three years ago, and that another option it is considering is revoking this permission.

Mr Davies also runs the £915m Jupiter UK Growth fund, which is the second worst performer in the IA UK All Companies sector over the past five years. 

The investment trust has over 20 per cent of its capital deployed into financial stocks, and this area of the market has struggled as a result of Brexit uncertainty. 

The comments from the chairman of the trust present a challenge for Jupiter’s newly appointed head of investment trusts, Magnus Spence. 

He takes the helm at a time when Jupiter has already lost the management of the £1bn Jupiter European investment trust, which the fund manager Alex Darwall is taking with him to his new venture. 

That trust accounts for approximately 80 per cent of the assets of the investment trust business at Jupiter. 

The company’s recently appointed chief executive, Andrew Formica, has placed growing the investment trust business at the centre of his strategy.   

david.thorpe@ft.com