- Industry economics and return analysis
- Competitive positioning
- Opportunities and risks from disruption
Talking Factsheet
Jupiter European Equities
Niall Gallagher gives an overview of Jupiter’s European equities strategy, including how the investment process works and how the team seek to generate alpha.
The strategy is a bottom-up focused European investment strategy. We're focused, typically looking to own between 30 and 40 stocks in the strategy. The way we get there is to do very detailed diligence on our companies. We typically go a long way beyond just talking to management teams. We seek out and talk to experts in various different industries to gain their understanding of important developments that might affect our companies.
And what we're trying to do, really, is select those businesses which have superior returns on capital employed. A good history of capital allocation, and therefore, to find the companies that will, through time, compound much higher levels of returns than the average companies in the market.
The investment team behind the strategy have been together for a long time. We've worked together for seven and ten years, respectively, and I've been doing this for nearly 30 years now. So it's an experienced team who've seen several cycles. We have a very strong idea of what it is we're looking for, and we don't try to do too much by running a focused strategy.
We're not aiming to have an in-depth view of everything. We're seeking to really understand what it is we invest in to a great degree. So the stock picking side comes from high conviction and detail. We then believe there is a strong role for good portfolio construction, thinking through the risks in the portfolio from both idiosyncratic, but also factor perspective and then trying to use the tools we have to focus on the kinds of risks where we specialise, which is the idiosyncratic stock risks.
So that combination of bottom up detail, heavy digging on stocks and then thinking about construction and risk holistically is what we think gives us an edge in our European equity strategy.
Flexible, style-agnostic, concentrated and highly active approach
- Experienced, longstanding investment team
- Seeking superior risk-adjusted returns: maximize information ratio via high idiosyncratic risk
- Seeking alpha generation via high idiosyncratic returns
- Offering unashamed accountability
Investment philosophy
We believe that companies which generate superior returns on capital employed and allocate capital intelligently will outperform over time
Select companies where Return on Capital Employed (ROCE) > cost of capital
Select companies that allocate capital intelligently
The most consistent method by which to achieve above average portfolio returns is to rely on the compounding effect of high return companies that allocate capital intelligently.
Why European equities?
Why is flexibility important in European equities?
Because in an era of higher volatility, there is no clear style edge between growth and value. Staying nimble is key.
Fund risks
Jupiter European Fund
- Currency (FX) Risk - The fund 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 fund may use derivatives to reduce costs and/or the overall risk of the Fund (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.
- 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 fund.
- 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 fund’s assets.
For a more detailed explanation of risk factors, please refer to the "Risk Factors" section of the Scheme Particulars.
Important Information
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. This document is for informational purposes only and is not investment advice. 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. 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 UK by Jupiter Asset Management Limited (JAM), 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 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.