Asset Manager Overview
Jupiter Asset Management is a UK based fund management group headquartered in London, which is listed on the London Stock Exchange. The group is known for its high conviction and active approach to fund management. In July 2020, the group completed its acquisition of Merian Global Investors, which has further enhanced its fund management talent pool and product range. Jupiter as a firm does not manage funds with a set investment process and does not impart house views or asset allocation decisions onto its underlying fund managers.
Fund Manager/Team Overview
This fund's systematic investment process has been developed and evolved by the Systematic equites team over the last 15 years, led by Head of Systematic Equities Amadeo Alentorn. He is supported by a team of five other Investment Managers and Analysts who all have over 10 years of industry experience. Dr Yuangao Liu and Matus Mrazik have been working with Mr Alentorn for over 10 years. The team are also supported by Jupiter's data science team and an external research advisory board. The advisory board includes academic experts who conduct bespoke research projects for the team as well as providing updates on academic advances, new insights, and analysis.
Investment Philosophy & Process Overview
To highlight investment opportunities, the managers use five different categories, or screens, each relying on a number of variables. Firstly, "Dynamic Valuation" examines various valuation metrics, such as price-to-book ratio, to identify undervalued stocks. Additionally, a quality adjustment is incorporated to help avoid investing in perennially underperforming companies. In the second category, "Sustainable Growth," the team aims to identify stocks that offer long-term and consistent growth while avoiding "one-hit wonders".
The third criterion, "Sentiment", focuses on analysts' views, where the market's reaction to changes in expectations can create short-term opportunities. For example, if an analyst revises their growth forecast upward, but the stock price under-reacts, there could be further upside potential. However, the team understands and accounts for the fact that this tool is less powerful when the market changes very rapidly.
The fourth category, "Company Management", aims to identify management teams that have historically used capital efficiently and made sound investment decisions. For example, they examine actions taken with excess profits, favoring debt reductions, higher dividends, share buybacks, and increased investment. Management teams that engage in empire-building through M&A or have excess capital on their balance sheets are avoided. In the final criterion, "Market Dynamics", the team uses price-driven information to identify stable trends likely to persist. To avoid "market bubbles", these trends must be supported by fundamental reasoning.
The managers then allocate assets to the best investment opportunities in each category. To determine how much is allotted to each factor, the team conducts proprietary analysis to assess the market environment. This includes evaluating investor sentiment, attitudes to risk, and future expectations based on the five criteria mentioned above.
The fund's process is very data-dependent, and while they receive data from a wide variety of sources, much of it is checked in detail by the team daily. Essentially, they aim to ensure that only the best data is used within the process. They strive to avoid the problem of "garbage in, garbage out," which could lead to an inferior process.
The fund has tight restrictions from a sector, industry, and stock perspective relative to the benchmark, and the fund managers aim to maintain an active risk of 3-4% per annum. Therefore, the fund's performance will be more closely aligned to its benchmark compared to other active funds in the sector, but it will have a higher tracking error than a passive fund.
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