Jupiter

Ariel Bezalel, Head of Strategy, and Harry Richards, Fund Manager, Fixed Income, explain where they have been snapping up credit opportunities, while remaining alert to the risks often concealed in bear market rallies.

Dividends have gone into lockdown. As the world attempts to control the spread of coronavirus, companies are slashing or foregoing their dividends globally in an effort to shore up their capital. In Europe, the European Central Bank (ECB) has taken it a step further, ordering banks to pause all dividends and share buybacks, and there is a real possibility other central banks may follow suit. 

The political ground is shifting among the western democracies: the emphasis is no longer merely on containment and conquest of Covid-19, it’s how and when to unshackle economies and get people back to work again. The political imperative is most immediate for President Trump, now only seven months away from his date with the electorate and the ballot box.

Our scepticism and our underweight exposure to US, UK and EU banks have kept the Jupiter Global Financials strategy safe from the bulk of the unfortunate deluge of dividend cancellations and profit warnings that COVID-19 has induced. Where we do have exposure, it is focused on banks and insurance companies with quality management teams in developed countries such as Switzerland or the US, such as the Swiss regional lender Banque Cantonale Vaudoise.

Dividends have gone into lockdown. As the world attempts to control the spread of coronavirus, companies are slashing or foregoing their dividends globally in an effort to shore up their capital. In Europe, the European Central Bank (ECB) has taken it a step further, ordering banks to pause all dividends and share buybacks, and there is a real possibility other central banks may follow suit.

Barely a day goes by around the world without another lock-down, border closure, confinement order or congregation curtailment as countries look after their own domestic interests first, anybody else’s second. National portcullises are down, drawbridges up, gates firmly shut. Central bank policy statements and national treasury crisis responses to help support markets, businesses and livelihoods are ten-a-penny and on shifting sands; interest rates evaporate, the stimulus and life-boat sums are telephone numbers long.

Markets slumped in the last week of February, but the Growth vs Value valuation spread actually widened further, explained James Clunie, Head of Strategy, Absolute Return. In the history of Growth vs Value spreads, we’re now in the 100th percentile, so it’s very extreme! Even when you’re in the 100th percentile, it can of course get even worse, and that’s what has happened.

So far, 2020 has not seen any let up in the strong headwinds facing Value investors, said Ivan Kralj, Assistant Fund Manager, Absolute Return. The spread in valuations between Growth and Value stocks worldwide has already been widening for an extended period of time, but has become even more extreme in recent months.

In this edition of Active Minds, Rhys Petheram and Charles Sunnucks look at the market’s reaction to the coronavirus so far, and why any assumption of a V-shaped economic recovery once the crisis abates may be premature. Meanwhile, Greg Herbert looks at the defensive nature of the rally in European equities, Robert Siddles assesses the bright future for the US’s dynamic, lightly regulated economy, while Steve Davies comments on some positive macro data in the UK.

Dermot Murphy looks back on another tough year for Value investors. But could things be approaching a turning point? Dermot examines the extreme level of valuation spread in the market and the low valuations now on offer, which make Jupiter’s Value Equities team more positive on the outlook for Value than they have been for some time.

In this edition of Active Minds, James Moir looks at the reversal of some post-election gains in the UK market and asks whether investors are overly focused on backward-looking data. Paul Pulickal looks at whether financial credit is likely to continue its strong run into 2020, Colin Croft reports on positive progress being made in Brazil, while Antoine Hucher looks at three trends that are set to shake up the European payments sector.

Rhys Petheram, Fund Manager, Multi-Asset discusses the latest proposals for EU Ecolabels on green bond and equity funds.

Beef and poultry prices have soared this year following the unprecedented African swine flu epidemic in China.Ariel Bezalel, Head of Strategy, Fixed Income, explains how the huge pork supply loss from China that has resulted is likely to reshape the global protein market for years to come.

Risk and uncertainty are challenging, even multi-dimensional, phenomena in investment. While investors crave simple risk ‘metrics’ or statistics with which to know the risks associated with an investment or a fund, James Clunie, Head of Strategy, Absolute Return, explains that risk management involves art, not just science.

Ariel Bezalel, Head of Strategy, Fixed Income, has been positioning his strategy for the end of the economic cycle for some time. He explains why he is sceptical that US rate cuts can drive a sustainable rally, and why allocating to high-quality, liquid assets is more important than ever based on a number of recession warning signs.

Hair-raising headlines are par for the course in emerging Europe – but that doesn’t mean that it’s not possible to generate strong returns investing in the region. Colin Croft, fund manager of the Jupiter Emerging European Opportunities Fund, looks back over some of the highlights from the past five years since he took over the fund’s management, and discusses why even crises can present attractive investment opportunities for investors in emerging Europe.

In a never-ending quest to find an ‘edge’ over their peers, alternative data may prove the holy grail for some fund managers, says Magnus Spence, Head of Investments, Alternatives.