Markets so far in 2022 have been unusually difficult for investors to navigate. Investors who split their portfolios between equities and bonds, hoping that when equities fall, bonds would provide a safe haven, have suffered. With a retreat from highly valued company shares combined with central banks raising interest rates, and higher inflation, both equities and bonds have suffered. It has not been easy for investors to find diversification.
The Jupiter Merian Global Equity Absolute Return Fund (GEAR) has historically offered a good source of diversification because it has had low correlation to both equities and bonds. In the 13 years since the fund’s inception, the fund has been uncorrelated with the MSCI World index.
Past performance is no indication of current or future performance. Source: Jupiter, as at 30.06.2022. Updated on an annual basis. Three month rolling correlation with MSCI World index.
How has GEAR achieved its long record of being uncorrelated with both equities and bonds? As a market neutral fund, we construct the portfolio carefully to hold its long and short books in balance. By having a short book, the fund may be able to profit even when equity markets fall. And by holding its short book in balance with its long book, the fund has a low dependency on the equity market in general.
The fund has had positive performance YTD
Past performance is no indication of current or future performance, and does not take into account commissions and costs incurred on the issue/redemption of shares. Returns may increase or decrease as a result of currency fluctuations.
It is easy for investors to anchor prices to their peak – ‘anchoring’ being a well-known behavioural or psychological bias. Our process is intended to take advantage of behavioural biases in the market. Investors may feel subjectively that prices deserve to be at their peak, but history shows they can continue to fall very far from that level.