Jupiter refreshes multi-asset range following outflows from Absolute Return fund

At the beginning of 2021 the funds were taken on by Jupiter’s multi-asset team, led by Talib Sheikh. Since then the team have been making several changes to the portfolio in line with the existing investment guidelines.

Now, following a review by the team, and in consultation with investors and consultants, Jupiter has decided to update the investment objectives further and change the names.

The Jupiter Absolute Return fund will become the Jupiter Flexible Macro fund on 4 October and its objective will now be to provide a positive total return higher than SONIA GBP over a three-year rolling period. Previously the fund’s objective was a total return higher than LIBOR GBP 3 month over the same period.

The £68m fund has struggled this year only returning .07% in the 12 months to 3 September, compared to the LIBOR GBP 3 month which returned .06%, according to FE fundinfo. The IA Target Absolute Return sector returned 6.4% over the same period.

This poor performance has led the fund to shrink from £1.2bn in January to £403m in May. 

However, the changes to the two distribution funds have been more substantial, with “additional powers of flexibility and diversification” and the funds “moving to a more global investment approach while retaining a meaningful UK exposure and allowing investment in a broader range of financial instruments”.

Commenting on the changes, Sheikh said: “Over the last decade, unprecedented policy action has suppressed yields to all-time lows and driven equity valuations to elevated levels. As we look forward, market returns are likely to be lower than previously, finding consistent returns for a moderate level of risk will be a challenge.

“Multi-asset solutions can help meet that challenge, by harnessing a wider range of asset classes and investment opportunities within a robust risk framework.”

The £516.1m Distribution fund will become the Jupiter Multi-Asset Income fund, while its benchmark will become more global too: 10% FTSE All-Share, 15% MSCI World (unhedged), 75% ICE BAML Global Corporate index (hedged to GBP).

Its benchmark used to have 25% allocated to the FTSE All-Share with the remainder split between the BAML GBP 1-10 Year Corporate Bond index and BAML GBP 15-15 Year Corporate Bond index.

The fund has failed to beat its previous target benchmark across one, three, five and ten years according to its factsheet. In three years to the end of July it has returned 12%, while the benchmark returned 15%.

The new investment policy also increases the limit that may be invested in high yield bonds to 25%; will require a minimum of 50% in UK investments or hedged back to GBP; and allow more flexible use of derivatives.

IA Targeted Absolute Return sector beats UK All Companies to become most viewed by advisers in Q1 2021

Meanwhile, the £268.8m Distribution and Growth fund will become the Jupiter Multi-Asset Income and Growth fund.

Its new performance comparator will be: 25% FTSE All-Share, 50% MSCI World (unhedged), 12.5% ICE BAML Global Corporate index (hedged to GBP), 12.5% ICE BAML Global HY index (unhedged).

This fund beat its benchmark in the year to the end of July, returning 21.9% compared to 21.6%, according to its factsheet. However, it has struggled over all other time frames and in three years it lost 0.2% while the benchmark returned 9.3%.

This is a substantial reduction in its allocation to the FTSE All Share – which previously made up 75% of the benchmark with the remainder split evenly between the BAML High Yield Bond and BAML Investment Grade Bond indices.

It will also reduce the minimum investment in shares of companies to 30%, require a minimum of 25% in UK investments or hedged back to GBP, and allow more flexible use of derivatives.

The new Jupiter Multi-Asset Income and Growth fund will reduce its annual management charge for all unit classes by 0.1%. The current AMC ranges between 0.75% to 1.5% depending on the share class.

The changes to the distribution funds will take place on 7 September. The levels of risk targeted by all three strategies will remain the same.

Sheikh said: “We were delighted to add these three portfolios to our multi-asset range last year, and have already seen encouraging indicators from the updates we have made to the portfolios.

“We believe these further changes will provide the additional flexibility and diversification needed to perform in today’s environment, without changing the funds’ existing levels of risk.”

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