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Jupiter continues to leak

Rather like a gas giant with a leak, investors hear a faint hiss at Jupiter Fund Management
August 2, 2021

 

  • Outflows of £2.3m in client funds through the period
  • Comparative three-year performance measures underwhelm

An initial negative market reaction to Jupiter Fund Management’s (JUP) interim results was short-lived, but you could argue that the source of investor displeasure was the clear evidence that Jupiter is still struggling to retain customers at a time when everyone and their mother-in-law is shovelling lockdown savings into mutual funds. Why this should be the case, is an increasingly vexed question?

In common with its peers, Jupiter benefited from a combination of lockdown savings searching for a purpose and a strong market rally. Assets under management grew by 54 per cent, compared with last year to a record £60.3bn, but the manager still suffered a net outflow of £2.3bn in client funds. The company attributes this to areas where assets are out of fashion - UK equities and European Growth saw heavy redemptions - despite the value rally the market saw during the half. 

However, an indication that the problem is more deep-rooted is clear when you compare Jupiter’s three-year performance measures with its peers. While the fund claims outperformance rates of 69 per cent, down slightly on the year-end results, Schroders, for example, has outperformance rates in the high 80s. Management is pinning its hopes on a new set of funds that are coming close to three-year maturity reversing the malaise. 

With no additional capital returns expected before the end of next year. Investors rightly query the point of holding Jupiter even at a discounted forward P/E for 2022 of just 10. Questions over whether another merger is the only route to better performance will not go away – unlike its clients, it seems. Hold.

Last IC View: Hold, 306p, 26 Feb 2021

JUPITER FUND MANAGEMENT (JUP)  
ORD PRICE:277pMARKET VALUE:£ 1.53bn
TOUCH:277-278p12-MONTH HIGH:307pLOW: 289p
DIVIDEND YIELD:6.2%PE RATIO:12
NET ASSET VALUE:157p*NET CASH:£99m
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
202018240.86.507.90
202124857.08.707.90
% change+36+40+34-
Ex-div:12 Aug   
Payment:01 Sep   
*Includes intangible assets of £632m, or 114p a share