Jupiter's share price ticked up this morning after its new chief executive outlined restructuring plans and said he was "encouraged" by the £600mn in outflows seen in the most recent quarter.
In a call with analysts this morning (October 20), Matthew Beesley said once the restructuring is complete, 15 per cent of the company’s workforce will have been made redundant.
It had previously been reported that 80 job cuts may be taking place at the firm, in an internal memo.
Beesley also outlined the fund changes that will take place as part of his strategy review, which will see nearly a third of Jupiter’s funds closed, merged or rationalised.
“It was clear to me on joining this firm that, put simply, we had too many funds, or crucially, too many subscale non-differentiated funds that were diluting our active proposition.”
Beesley said there were also areas where the company had overlapping capabilities or were covering areas which showed limited client demand.
“Across our whole product set, 46 per cent of our mutual funds have less than £100mn of assets…this was clearly a fund range in need of some rationalisation.”
Once this rationalisation has been done, Jupiter will have 25 per cent fewer funds, though this will impact just 4 per cent of overall group assets under management.
The company's share price rose 4.7 per cent on the news.
Encouraging flows
Beesley said he was “encouraged” by the £600mn in outflows seen in the three months to the end of September.
"I am encouraged by the improved flow picture in the third quarter, despite continued market volatility,” he said.
Jupiter's flows over the past year
| Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Q1 2022 | Q2 2022 | Q3 2022 | |||
Net flows | (0.7) | (1.5) | (0.6) | (1.0) | (1.6) | (2.0) | (0.6) | |||
Source: Jupiter
The fund house’s retail and wholesale division saw £1.1bn in net outflows in the period, but £500mn in institutional mandates lessened overall outflows to £600mn.
Beesley said since his appointment, he has sought to take “decisive actions” to ensure the company has an “optimal” operating model to succeed.
“[These actions include] reducing our cost base, streamlining the fund range and restructuring our management team.”
He added he is confident that Jupiter is “well placed” to return to sustainable growth.
From January 1 next year, the fund house will change its dividend policy by resetting its ordinary dividend to 50 per cent of pre-performance fee earnings, with the dividend no longer subject to a minimum payment to match that of the previous year.
The company said this will allow it to return capital to shareholders, and it will embark on a £10mn share buyback programme in the next few months.
Outflows persisting
Jupiter has struggled with outflows for years, with its funds losing £3.8bn last year despite gross inflows of £16.5bn.
It is known as a specialist in the value style of investing, which has been unpopular in recent years, and has also suffered from the rising market share captured by model portfolio providers which has impacted its multi-manager products.
The outflows are focused mainly in the group’s European and UK equity funds, but also in the Merian funds, a fund house taken over by Jupiter in 2020.
Former chief executive Andrew Formica announced his resignation in June, saying the initial phase of the business’s transformation project had been completed.
Formica said he was leaving to move back to Australia with his family.
However, a month before his resignation, former board member Jon Little criticised the fund house, saying it has "lost its way" and needs to change its management and strategy.
Little took aim at Formica, saying his appointment was a “mistake”, and the selection process was undertaken with “undue haste and without proper consideration of the risks involved”.
He also suggested the company's drop in share price seen over the past few years was “self inflicted”.
At the time Jupiter said: “We listen to and respect the views of our shareholders and will respond to Little directly…we are confident that we have the right foundations in place to deliver...underpinned by our strong capital position.”
sally.hickey@ft.com
