Jupiter staunches the outflows

Jupiter Fund Management’s (JUP) results showed initial signs that the turnaround strategy started at the beginning of the year is showing signs of progress. For example, an ignominious run of fund outflows dating back to 2017 has finally stopped as the manager pivoted towards institutional clients and away from the more volatile – though admittedly more profitable – retail investor base that had driven Jupiter’s growth over the years. When set alongside some astute husbandry in terms of costs, investors were given grounds for optimism that the company’s fate is now entirely in its own hands.

Institutional client inflow of £1.7bn help assets under management to stabilise at £51bn, although the downside of taking on more lower-margin business was clear in the three-basis point decline in the overall net management fee margin to 71 basis points. Overall, management believes the stability of institutional fees is worth the margin decline within the context of a more diversified business.   

Management seems to have got on top of Jupiter’s traditionally bloated cost base by keeping its pre-compensation costs firmly under control. When performance-related costs are stripped out, the company recorded a fall of £6.3mn to leave the fixed cost base at £128mn by the end of the half.

Panmure Gordon analysts wrote in a note: “The turnaround of Jupiter, or rather a return to its simpler past, will not be quick, easy, or linear but it has at least started under this chief executive…” We tend to agree and with the valuation now in line with other active managers at nine times Panmure’s forecasts, it could be worth another look as a recovery share. Hold.

Last IC View: Hold, 151p, 24 Feb 2023