European Equities: a year in review

Our European Equities team has now been in place at Jupiter for over a year – pleasingly adding another year of positive relative outperformance to our longer term track record.

In May 2025, I joined my co-investment managers, Chris Legg and Christopher Sellers, at Jupiter, bringing our long-established investment partnership and established European equity track record to a new platform.

After many years managing European equity strategies elsewhere, joining a firm with a strong commitment to active investing and genuine manager autonomy has allowed us to continue applying the same disciplined investment philosophy and process that has guided my decision-making for over two decades. Importantly, there has been no need to compromise our approach. Jupiter’s culture of empowering investment teams, free from a prescribed house view, has enabled us to remain true to the principles that have defined our success through multiple market cycles.

A year of progress

The past year has also been one of significant progress. We have successfully transitioned the portfolios, embedded our investment process across the strategy range and strengthened relationships with both existing and new clients. At the same time, we have navigated a period of considerable market volatility and rapidly changing political and economic conditions, while remaining focused on the long-term opportunities we see across European equities.

An anniversary is always a useful opportunity to assess what has worked well, what we have learned and where we can continue to improve. Encouragingly, as we look back on our first year at Jupiter, there has been far more to celebrate than to regret. While we remain as intellectually curious and self-critical as ever, we believe the foundations laid over the past twelve months position us strongly for the years ahead.

A strong start – but we remain focused on delivering over the long-term

As a reminder, our investment approach is based on the belief that companies that sustainably generate returns on capital employed above their cost of capital – or are on a path to doing so – and allocate capital intelligently will outperform over time.

To capture this potential, we focus on identifying areas of value creation, such as industry economics and competitive positioning, then following that up with intensive, multi-dimensional stock-level research to seek an informational advantage in particular names.

Our team follows a style-agnostic, dynamic approach – seeking the best risk reward opportunities across the market. Having alighted on names we wish to add to the portfolio, we apply strong principles of risk-based portfolio construction, actively focusing portfolio risk on stock selection, whilst minimising factor biases, to actively curate a portfolio of 30-50 stocks.

In the first twelve months that we managed this strategy at Jupiter, it has significantly outperformed its benchmark index as well as sitting in the top decile of its peer group.

Past performance does not predict future returns. Source: Morningstar, NAV to NAV, gross income reinvested, net of fees, in EUR, Jupiter European Select D EUR Acc, to 12.05.26. *FM inception: 12.05.2025. ¹Comparator benchmark: MSCI Europe Net Total Return Index. ²Peer group: EAA Fund Europe Large-Cap Blend Equity.

It is pleasing that we have so far generated an uplift in relative performance for investors in this fund over the last year, but we acknowledge that most clients will rightly be focused on what we can deliver over periods longer than one year – and we know the longer term track record of the Jupiter funds will take time to turn around. Of course we may not outperform every year, and within active investment management no outcome is ever guaranteed, but we have confidence that our investment approach can generate material alpha over the long term.

The reason we have this confidence is due to our extensive history of following this same investment process through a wide variety of market regimes. This is a battle-tested approach.

An analysis of the past year: the outperformers

Looking at the past year in European markets, and how we navigated it specifically, there are a few areas that stand out as key positive performance drivers for our strategy.

Banks were a notably strong contributor to relative performance, with all our holdings in this sector generating alpha. Amongst these, the two Spanish banks – Caixa and BBVA – were the stars of the show. The portfolio continues to have exposure to selected banks where we believe their characteristics remain consistent with our investment process and portfolio objectives.

Another positive over the past year was the Electricals sector, where Prysmian was actually the top single stock contributor across the entire portfolio. Another name in this sector that added to relative returns was Siemens Energy, which we purchased at the turn of the year. The theme of electrification is one of the few areas of the market where we think the structural growth drivers can be measured on a >10-year basis and it is an area where we feel we can express our preference for European markets with competitive advantages.

One other sector where exposure – or rather a lack of it – added relative value for the strategy was Consumer Discretionary, more specifically the luxury, autos and sportswear segments. We’ve had a negative view on this sector for some time based on indigestion from a long boom, too high prices and a weakening dollar – all of which run counter to the principles of our investment process. However, it should be noted that we are now at a point where stock valuations are more reasonable, although not outright cheap.

Last, but by no means least, is the Semiconductor sector, which added performance through stock selection despite our underweight to ASML, as ASM International, BE Semiconductor and Infineon all performed very well. As with the electrification stocks, our exposure to this theme in the portfolio is based on our assessment of the medium-term fundamental drivers for the sector, although we are a little more circumspect on valuation.

An analysis of the past year: the underperformers

Towards the end of 2025 we sold the strategy’s positions in Total and Shell on the expectation that oil and gas prices would remain in a low range for a while, and because the prospective free cash flow yields of both stocks had fallen after several years of strong performance. Obviously, we did not anticipate the Iran conflict and the significant rise in oil and gas prices that resulted from that, which resulted in strong momentum for the Energy sector, and the strategy gave up some potential returns because of that.  On the positive side, we did have some exposure to this trend, as oil services stock Subea7 performed well for the strategy.

Another area of underperformance was the Construction & building materials sector, where our holdings in Saint Gobain and Kingspan, the former in particular, both underperformed. In both cases the companies – which we consider to be well-managed – were hit by macro factors as the environment for both new build and repairs/maintenance and, residential as well as non-residential remains at very low levels versus history almost across the globe. We have been anticipating a pickup for some time, which has not yet emerged, however we have maintained patience with both stocks.

The last underperforming sectors I want to highlight are Consumer Staples & Consumer Healthcare, where underperformance from the likes of Beiersdorf, Straumann, Haleon and L’Oreal were somewhat countered by good timing in our purchase of Nestle. Each stock has different drivers and its own story, but the broader picture is that the last 12 months have not been an easy environment for consumer exposed areas, with consumers either reticent or lacking confidence across many regions, particularly middle-income consumers. 

Continuing to follow our battle-tested process

In summary, the past year has shown the ongoing efficacy of our investment process as we successfully navigated a challenging market backdrop. We remain focused on delivery over the long term, accepting that there will be tougher periods at times, but trusting that our approach has the potential to generate long-term alpha across market cycles.

The focus of this article has been on specific matters of performance and attribution over the past twelve months. If you’re interested in reading our forward-looking macro views, and why we believe this asset class is relatively well positioned for the current environment, then we have recently published an article entitled “European Equities: Navigating complexity, capturing opportunity”, which can also be found on the Jupiter website.

Past performance does not predict future returns. Source: Morningstar, NAV to NAV, gross income reinvested, net of fees, in EUR, Jupiter European Select D EUR Acc. FM inception: 12.05.2025. Comparator benchmark: MSCI Europe Net Total Return Index.

Strategy specific risks

• 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.
• 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.
• Market Concentration Risk (Geographical Region/Country) - Investing in a particular country or geographic region can cause the value of this investment to rise or fall more relative to investments whose focus is spread more globally in nature.
• 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.
• Counterparty Default Risk - The risk of losses due to the default of a counterparty on a derivatives contract or a custodian that is safeguarding the Strategy’s assets.
• 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.
• ESG Data - The Strategy uses data from third parties (which may include providers for research, reports, screenings, ratings and/or analysis such as index providers and consultants) and that information or data may be incomplete, inaccurate or inconsistent.

For a more detailed explanation of risk factors, please refer to the "Risk Factors" section of the Prospectus.

Important information

This is a marketing communication. This document is intended for investment professionals and is not for the use or benefit of other persons, including retail investors. This document is for informational purposes only and is not investment advice. 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. Past performance does not predict future returns. 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. Company or holding examples are for illustrative purposes only and are not a recommendation to buy or sell. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given.

Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI.