Alex Darwall steps down as manager of Jupiter European

Mr Nichols will work with Mr Darwall during a transition period before assuming full responsibility for the funds later this year. His appointment is the first step in succession planning for Mr Darwall’s retirement.

Mr Darwall has run Jupiter European since 2001, Jupiter European Opportunities Trust since 2000 and Jupiter European Growth since April 2007, and made very strong returns with the funds he runs. He has worked at Jupiter since 1995 and has covered European equities since 1987.  

Jupiter said Mr Nichols would provide “continuity and consistency” as he has a similar stock selection approach and management style to Mr Darwall. He has been co-manager of Threadneedle European Select fund since 2016 alongside longstanding manager David Dudding. He ran BMO Select European Equity Fund (GB00B4Q7SF31) between 2011 and 2015, and has covered European equities since 2001.

But the two managers' performance has differed. Since November 2011, when Mr Nichols became manager of BMO Select European Equity, he has returned 122 per cent across the different funds he has run, against a 205 per cent return for Mr Darwall over that period. The Investment Association (IA) Europe ex UK fund sector average was 120 per cent over this period, while MSCI Europe ex UK index rose 114 per cent.

Data company Morningstar says that the Jupiter European and Threadneedle European Select funds have some common attributes. Around three-quarters of both funds are invested in large and megacap stocks with a growth bias, and they are both fairly concentrated with around 40 holdings. But Mr Darwall tends to invest a greater percentage of his funds' assets in the 10 largest holdings, making bets on companies he favours.

Adidas (GER:ADIDAS), Relx (REL) and Dassault Systemes (FR:DSY) feature among the 10 largest holdings of both funds. But Threadneedle European Select is more focused on consumer goods and industrial stocks, while Jupiter European's largest sector exposure is healthcare, which accounts for over 28 per cent of its assets, with technology and industrial companies each accounting for around 16 per cent.

One of Jupiter European's largest holdings is German electronic payment company Wirecard (GER:WDIX), which accounted for 7.7 per cent of its assets at the end of February. Its share price has fallen 33 per cent following allegations of irregularities in its Singapore office. Before this the shares were a strong contributor to the fund's performance.

Threadneedle European Select, by contrast, has never invested in Wirecard.

Ben Seager-Scott, chief investment strategist at wealth manager Tilney, which has client money in both of these funds, has placed them under review. “The transition [at Jupiter European] strikes me as rather rushed," he explained. "A more extended bedding-in and succession-planning process could make the transition smoother. We rate the skills of Mr Darwall, Mr Nichols and Mr Dudding, but this is still a material change. We will need to assess how the philosophy and process of the funds might be affected. While there are some similarities, there are also a lot of differences in the styles.”

Dzmitry Lipski, an analyst at investment platform Interactive Investor, said: “This will be concerning and brings uncertainty given Mr Nichols’ experience has only been as co-manager. But investors should sit tight and review more information on the future direction of the [fund].”

However, Darius McDermott, managing director of rating agency FundCalibre, said Mr Nichols was one of the best replacements Jupiter could have found.

“Mr Nichols has a similar investment style and philosophy and looks for quality growth companies," he said. "He has co-managed Threadneedle European Select since 2016 and we have been very impressed with him."

Threadneedle European Select will continue to be run by Mr Dudding, who will be supported by a new co-manager, Ben Moore. However, Columbia Threadneedle had planned for Mr Nichols to eventually take on full responsibility for Threadneedle European Select so that Mr Dudding could focus on building up another fund he runs, Threadneedle Global Focus (GB00BF0Q8K85). This fund launched last year and so far only has assets of £3.4m.  

Fund performance