Jupiter still struggling to stem redemptions

Jupiter Fund Management (JUP) has released its first set of financial results including a full-year contribution from Merian Global Investors, acquired in 2020. The initial impression is that the deal has done little to aid client retention. Acquisition is another matter, of course. So, you have a situation in which gross inflows of £16.5bn stayed at the record levels achieved in 2020, yet net outflows, although marginally down on the prior year, remain stubbornly high at £3.8bn.   

The wealth manager notes that “client redemptions predominantly came from those strategies which are currently in areas of weaker client demand”, which seems rather self-evident. It cited UK equities and European growth strategies, responsible for respective net outflows of £1.6bn and £900mn. Mandates acquired under the Merian deal contributed to the outflows, with management pointing out that the UK equity and systematic equity mandates employ the value style of investing, something of an outlier for a time, but which seem to be coming back into vogue as the rotation out of growth stocks gathers momentum. That’s the received wisdom, at any rate. It also revealed that shareholders will have to get used to share buybacks rather than special dividend payments in the future.

In terms of investment performance, Jupiter revealed that 37 per cent of its mutual fund assets under management (AuM) delivered first quartile performance against peers over a three-year period, compared with 42 per cent in 2020, although this metric is somewhat superficial in isolation.

The Merian deal has boosted the asset base, and its underlying mandates could conceivably deliver improved performance through 2022, particularly if the Ukrainian hostilities accelerate the move back towards value stocks. The consensus view is that net outflows will reduce to £600mn this year, before moving into a surplus of £1.2bn in 2023. Hold.

Last IC view: Hold, 277p, 2 Aug 2021