Despite the breadth of investment styles found in the absolute return sector, a negative correlation to equities is still relatively rare. James Clunie, Head of Strategy, Absolute Return, considers why this might be so, and writes about how managing a strategy that is different requires resilience and has potential value for investors.
In his latest article, James Clunie explains why over the past five years to year-end 2018, the Jupiter’s Absolute Return strategy has been a worthwhile portfolio diversifier: it has generated a positive return, with negative correlation to the MSCI World Index, and has often performed well during periods of heightened equity market volatility.
The world’s technology giants continue to capture headlines, having grown to dominate large industries as the world becomes increasingly digitised.
Consistency is at the heart of Alexander Darwall’s investment process. Since joining Jupiter in 1995, he has become the company’s longest-serving fund manager. His steady approach has withstood all manner of market events, from the tech bubble to the financial crisis to the eurozone crisis.
We are not yet halfway through 2018 and already five of the holdings in the Jupiter UK Growth Fund have been taken over or received formal bid approaches: GKN, Zoopla, CityFibre, Virgin Money and Inmarsat. Given the fund only holds 37 positions, that is an unusually high hit rate, certainly the highest in any of the eleven years I have been working on the fund. Why has this happened, and can it continue?
We started shorting Campbell Soup in the strategy back in 2013 and I wrote about our short position in during 2014. Since then, the size of our short position has waxed and waned with our response to newsflows and the movement of the share price. We’re still modestly short the stock as I write, but the share price is much lower than before.
The unusually calm market conditions of 2017 have given way to the swaggering return of volatility and generally rising US Treasury yields. But Ariel Bezalel, Head of Strategy, Fixed Income has believed for some time that the tide is set to turn and that the bull market in government bonds is far from over. Market conditions year to date have only strengthened his conviction. He explains why a prudent approach is now needed in an environment that is at a late stage of the business cycle and vulnerable to unforeseen shocks.
The US Federal Reserve might be too optimistic about its ability to raise rates three to four times this year. Ariel Bezalel, Head of Strategy, Fixed Income, examines the dynamics of the US rate environment and explains why he believes the end of the rate hiking cycle could be in sight.
After a hiatus in 2017, volatility appears to be back. Are recent tremors in markets a catalyst for change or yet another false positive? Looking at a range of stress indicators, James Clunie, Head of Strategy, Absolute Return, believes regime change could be afoot.
Saudi Arabia has attracted international attention recently because of the reform agenda being driven by crown prince Mohammad bin Salman.