We all know that a good fund is a good fund whichever way you look at it. And all fund of fund operators choose from the same universe of funds, don't they? You could be forgiven for thinking so. But they don't. Here are just some of the ways in which they can vary:
One group will not look at any fund that does not have a three-year track record – even if the manager has experience which predates Black Monday. And what is so special about three years, anyway? Another group avoids all funds below a predetermined size – even though small funds are acknowledged to be more nimble and flexible. Why impose unnecessary handicaps on yourself? Don’t ask us, ask them.
A third group will not make use of specialist funds. Too risky, it says, when perhaps it simply lacks the expertise. Yet another group makes a great fuss about its deliberately complex, number-crunching, spreadsheets. The methodology here seems to be: Torture the data enough and it will confess. Not for them Keynes’ dictum that it is better to be roughly right than precisely wrong.
A fifth group won’t ever make use of low-cost trackers funds. Groups six through to nine, will not invest in top-performing funds from certain leading houses which refuse to offer annual rebates – as if unit holders should be deprived of those peers who are not playing the game, dear chap.
A tenth group, meanwhile, will make investments and negotiate discounts based on something more fuzzy: the total amount of business ‘our’ organisation does with ‘their’ organisation. Things start to get murky here and it is not clear how such a policy is in the best interests of investors. Or as The Monkees once sang, ‘Today there is no black or white, only shades of grey.’
The Jupiter approach
In contrast, the team at Jupiter attempts to add incremental returns and the Merlin Portfolio Trusts are managed in response to the way we see the world changing. We are not rear-view mirror investors. Instead we seek to identify likely inflection points in the market. We check and recheck our rationale. Then we act if, and only if, we are confident that our strategy has a very good chance of success. And we take sizable positions. Are we taking a bit more risk to obtain a bit more out-performance? Well of course we are. But we are monitoring that risk very closely indeed.
We do not, however, make calls for the sake of it. Indeed, sometimes it is right to practise the underrated virtue of studied, conscious inactivity. There is no point in incurring dealing costs needlessly. We run quite concentrated portfolios in order to control our positions. After all, there are limits to the benefits to be had from diversification. Since you can’t dilute water, we don’t understand the logic of a fund of funds with, say, thirty or forty holdings.
If we are different, it is that we are not relying solely on buy-and-hold fund selection or asset allocation but are also trying to offer genuine active management, through the medium of fund of funds. We also have room to be much more nimble than manager of manager funds because of the sheer time it takes the latter to disinvest from the mandates that they have previously awarded.
We can also be nimble on behalf of Independent Financial Advisers in a way which would not always be possible for them. Just think of the amount of time it takes to contact every client and gain agreement to make portfolio changes, let alone deal with the additional compliance burdens.
If, and when, we have identified a short-term trading opportunity then all terms will have been agreed and all dealing sheets completed in advance. For example, recently we were certain that there would be a relief rally on the commencement of the war with Iraq. But we had to be ready as often the largest gains in a rally come early. Noah didn’t wait for it to rain before starting to build the Ark. We monitor a range of bespoke, in house indicators and, like Ti-Chi combatants, remain poised for action. It is essential to be able to move quickly and deal before noon. Money making opportunities will always arise but one has to be ready for them.
The Jupiter Merlin Portfolio Trusts
Fund of funds can be an ideal home for investors wanting to rationalise a scattered holding of PEPs, ISAs or other investments; equally they could be a suitable route into stockmarket investment for those with only a modest sum to commit (minimum investment £10000 outside an ISA).With the Jupiter Merlin Portfolio Trusts there are 3 fund of funds to choose from, Income, Growth and Worldwide. The 3 funds are run by our dedicated independent fund of funds team John Chatfeild-Roberts, Algy Smith-Maxwell and Peter Lawery, who have over 25 years combined experience in this market. Their investment approach is based on judgement of the calibre of individual fund managers, underpinned by rigorous analysis of candidate funds’ investment process and research resources. Their communicative, informal management style fits closely with the Jupiter culture and aim for outperformance.
For more information on the Jupiter Portfolio Service call 0500 0500 98 for an information pack or clickhere
Note: Jupiter Unit Trust Managers Limited is authorised and regulated by the Financial Services Authority. Its registered address is 1 Grosvenor Place, London SW1W 7JJ. The above commentary represents the view of the fund manager at the time of preparation. They are not necessarily those of the Jupiter group as a whole and should not be interpreted as investment advice which Jupiter is not authorised to give in this context. This information is intended for investment professionals and should not be relied upon by other persons.IFAonline
A third group will not make use of specialist funds. Too risky, it says, when perhaps it simply lacks the expertise. Yet another group makes a great fuss about its deliberately complex, number-crunching, spreadsheets. The methodology here seems to be: Torture the data enough and it will confess. Not for them Keynes’ dictum that it is better to be roughly right than precisely wrong.
A fifth group won’t ever make use of low-cost trackers funds. Groups six through to nine, will not invest in top-performing funds from certain leading houses which refuse to offer annual rebates – as if unit holders should be deprived of those peers who are not playing the game, dear chap.
A tenth group, meanwhile, will make investments and negotiate discounts based on something more fuzzy: the total amount of business ‘our’ organisation does with ‘their’ organisation. Things start to get murky here and it is not clear how such a policy is in the best interests of investors. Or as The Monkees once sang, ‘Today there is no black or white, only shades of grey.’
The Jupiter approach
In contrast, the team at Jupiter attempts to add incremental returns and the Merlin Portfolio Trusts are managed in response to the way we see the world changing. We are not rear-view mirror investors. Instead we seek to identify likely inflection points in the market. We check and recheck our rationale. Then we act if, and only if, we are confident that our strategy has a very good chance of success. And we take sizable positions. Are we taking a bit more risk to obtain a bit more out-performance? Well of course we are. But we are monitoring that risk very closely indeed.
We do not, however, make calls for the sake of it. Indeed, sometimes it is right to practise the underrated virtue of studied, conscious inactivity. There is no point in incurring dealing costs needlessly. We run quite concentrated portfolios in order to control our positions. After all, there are limits to the benefits to be had from diversification. Since you can’t dilute water, we don’t understand the logic of a fund of funds with, say, thirty or forty holdings.
If we are different, it is that we are not relying solely on buy-and-hold fund selection or asset allocation but are also trying to offer genuine active management, through the medium of fund of funds. We also have room to be much more nimble than manager of manager funds because of the sheer time it takes the latter to disinvest from the mandates that they have previously awarded.
We can also be nimble on behalf of Independent Financial Advisers in a way which would not always be possible for them. Just think of the amount of time it takes to contact every client and gain agreement to make portfolio changes, let alone deal with the additional compliance burdens.
If, and when, we have identified a short-term trading opportunity then all terms will have been agreed and all dealing sheets completed in advance. For example, recently we were certain that there would be a relief rally on the commencement of the war with Iraq. But we had to be ready as often the largest gains in a rally come early. Noah didn’t wait for it to rain before starting to build the Ark. We monitor a range of bespoke, in house indicators and, like Ti-Chi combatants, remain poised for action. It is essential to be able to move quickly and deal before noon. Money making opportunities will always arise but one has to be ready for them.
The Jupiter Merlin Portfolio Trusts
Fund of funds can be an ideal home for investors wanting to rationalise a scattered holding of PEPs, ISAs or other investments; equally they could be a suitable route into stockmarket investment for those with only a modest sum to commit (minimum investment £10000 outside an ISA).With the Jupiter Merlin Portfolio Trusts there are 3 fund of funds to choose from, Income, Growth and Worldwide. The 3 funds are run by our dedicated independent fund of funds team John Chatfeild-Roberts, Algy Smith-Maxwell and Peter Lawery, who have over 25 years combined experience in this market. Their investment approach is based on judgement of the calibre of individual fund managers, underpinned by rigorous analysis of candidate funds’ investment process and research resources. Their communicative, informal management style fits closely with the Jupiter culture and aim for outperformance.
For more information on the Jupiter Portfolio Service call 0500 0500 98 for an information pack or clickhere
Note: Jupiter Unit Trust Managers Limited is authorised and regulated by the Financial Services Authority. Its registered address is 1 Grosvenor Place, London SW1W 7JJ. The above commentary represents the view of the fund manager at the time of preparation. They are not necessarily those of the Jupiter group as a whole and should not be interpreted as investment advice which Jupiter is not authorised to give in this context. This information is intended for investment professionals and should not be relied upon by other persons.IFAonline
