Small cap stocks have outperformed large caps over the long term, and given current valuation discounts, there is considerable potential for this trend continuing, in our view. Small cap companies are often younger, fast-growing businesses than can be more volatile than larger companies.
Strategy risks:
- Company shares (i.e. equities) risk - The value of Company shares and similar investments may go down as well as up in response to the performance of individual companies and can be affected by daily stock market movements and general market conditions.
- Counterparty risk - The risk of losses due to the default of a counterparty, e.g. on a derivatives contract or a custodian that is safeguarding the strategy’s assets.
- Currency (FX) risk - The Strategy can be exposed to different currencies and movements in foreign exchange rates can cause the value of investments to fall as well as rise.
- Derivative risk - The Strategy may use derivatives to reduce costs and/or the overall risk of the Strategy (this is also known as Efficient Portfolio Management or “EPM”). Derivatives involve a level of risk; however, for EPM they should not increase the overall riskiness of the Strategy.
- ESG - Investments are selected or excluded on both financial and non-financial criteria. The strategy’s performance may differ from the broader market or other Strategies that do not utilise ESG criteria when selecting investments.
- Pricing risk - Price movements in financial assets mean the value of assets can fall as well as rise, with this risk typically amplified in more volatile market conditions.
- Smaller companies - The Strategy invests in smaller companies, which can be less liquid than investments in larger companies and can have fewer resources than larger companies to cope with unexpected adverse events. In less favourable market conditions these companies may therefore under-perform larger companies and the Strategy may under-perform Strategies that invest predominantly in larger companies.
- Emerging markets risk - Emerging markets are potentially associated with higher levels of political risk and lower levels of legal protection relative to developed markets. These attributes may negatively impact asset prices.
- Liquidity Risk (general) - During difficult market conditions there may not be enough investors to buy and sell certain investments. This may have an impact on the value of the strategy.
- Liquidity Risk (less liquid securities) - some investments may be hard to value or sell at a desired time and price. In extreme circumstances this may affect the strategy’s ability to meet redemption requests upon demand.
For a more detailed explanation of risk factors, please refer to the "Risk Factors" section of the Scheme Particulars.
The value of active minds: independent thinking
A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.
Important Information
Marketing communication. This document is intended for investment professionals and is not for the use or benefit of other persons, including retail investors. The value of investments and income may go down as well as up and investors may not get back amounts originally invested. Exchange rate changes may cause the value of investments to fall as well as rise. This document is information only and is not investment advice. The views expressed are those of the author(s) at the time of preparation, are not necessarily those of Jupiter as a whole and may be subject to change. Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given. Past performance does not predict future returns. Simulated past performance and past performance more generally does not predict future returns. Where a benchmark is used for comparison, it is shown for illustrative purposes only and does not imply future performance. No part of this document may be reproduced in any manner without the prior permission of Jupiter. Issued in the UK by Jupiter Asset Management Limited, registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU and Switzerland by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg is authorised and regulated by the Commission de Surveillance du Secteur Financier. No part of this presentation may be reproduced in any manner without the prior permission of JAM or JAMI.