CoCos have the potential to offer a yield in excess of that delivered by European bank equities and corporate High Yield bonds, but with lower volatility. CoCos can also have low correlations with government and corporate bonds, and thus provide investors with diversification.
The fund intends to provide access to the growing opportunities of contingent convertible bonds (CoCos) with the aim of generating a total return.
CoCos have been a fast-growing asset class, with the increase in their issuance driven by regulatory change. CoCos were created in the wake of the global financial crisis of 2007-08, in order to increase the ability of banks to bear losses beyond their equity buffers. Regulators have encouraged issuance of the securities.
CoCos are a form of hybrid-subordinated debt security that can convert into equity or have their principal written down if certain triggers occur. To compensate investors for this remote risk, CoCos typically offer a significantly higher rate of interest compared to other kinds of bonds.
Although a large and highly liquid asset class, managing a portfolio of CoCos requires specialist knowledge. The fund manager has a wealth of experience: Luca Evangelisti has been involved with the asset class since the early days of its inception. He has invested across the capital structure and is the lead decision maker for financial credit in Jupiter’s flagship Unconstrained Bond Strategy.
Striking a balance
Meet the team
Luca is supported by a dedicated Financials analyst (Paul Pulickal) within Jupiter’s wider Fixed Income team. They benefit from collaboration across Jupiter’s investment teams, including with Financials equity specialist (Guy de Blonay) and across Equity teams.
Guy de Blonay
Key fund literature
Latest insights from the team
Four reasons why the time is ripe for CoCos
Please note: Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing are not necessarily those of Jupiter as a whole and may be subject to change. This is particularly true during periods of rapidly changing market circumstances.
Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value of overseas investments to rise or fall. 20443
This communication provides information relating to Jupiter Financials Contingent Capital Fund (the “Fund”), which is a sub-fund of Jupiter Asset Management Series plc. Jupiter Asset Management Series plc is an investment company with variable capital established as an umbrella fund with segregated liability between sub-funds which is authorised and regulated by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as amended. Registered in Ireland under registration number 271517. Registered office: 33 Sir John Rogerson’s Quay, Dublin 2, Ireland.