Jupiter Loses Euro Trust to Darwall's Devon

Jupiter European Opportunities will scrap performance fee, while Invesco chief investment officer exits and there are changes on the Woodford Patient Capital board

James Gard 3 October, 2019 | 11:29AM
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Alexander Darwall

The start of autumn has seen a flurry of changes in the asset management world.

Fund manager Jupiter will no longer manage the Jupiter European Opportunities Trust (JEO), after the board decided to move with manager Alexander Darwall to his new investment outfit.

Jupiter European Opportunities will now be run by Darwall’s Devon Equity Management, a London-based boutique firm set up in April 2019. According to a stock exchange announcement, the trust will be run by Devon and authorised fund manager FundRock from November.

It was announced in April that manager Alexander Darwall would be stepping down from managing the two unit trusts, Jupiter European and Jupiter European Growth, but Jupiter said he would continue to manage the trust. Just weeks later it was revealed that Darwall was leaving the firm to set up his own fund house. 

At the time, Darwall agreed not to launch any competing open-ended offerings that would rival Jupiter's for two years. However, the trust was widely expected to follow Darwall to Devon Equity Management by industry experts. 

Morningstar downgraded both open-ended funds from Gold to Neutral when Darwall’s exit was confirmed, but maintained the Gold Analyst rating for Jupiter European Opportunities.

Analyst Samuel Meakin says the trust is now "Under Review" subject to more details about the move and research into parent firm Devon. Meakin says that Darwall continues to be viewed positively by the analyst team and that they don't expect the investment approach to change. Meakin adds that the non-compete clause with Jupiter on the open-ended funds means that the trust is likely to be the new investment house's key offerings.

As part of the switchover, the trust will continue to pay fees to Jupiter of 0.75% of assets up until the end of May 2020. After that, Devon will introduced a tiered fee structure: 0.9% of net assets up to £1 billion and 0.8% above that. But Devon, unlike Jupiter, will not charge a performance fee.

Invesco Exit

In a week of boardroom departures, Invesco announced its chief investment officer Nick Mustoe is to step down after 10 years running the firm’s Henley Investment Centre.

He will be replaced by Stephanie Butcher, who manages the two-star rated Invesco European Equity fund with Jeffrey Taylor, and the three-star rated Invesco European Equity Income fund.

From the start of next year, Mustoe is being replaced as lead manager on a range of multi-asset funds, three global equity funds, three offshore funds and the Invesco Perpetual Select Global Equity (IVPG) investment trust.

Darius McDermott, managing director of Chelsea financial services, said retail investors shouldn’t expect too many changes to the fund's investment strategy: “The approach at Invesco has always been team-led so we feel the infrastructure will mean that although we’re sure he’ll be missed, and the lead manager on a number of funds will change, there should be little, if any, impact on underlying investors.”

Invesco has suffered significant outflows this year, according to Morningstar data. Its targeted returns fund suffered outflows of just under £300 million in August and nearly £1 billion over the past year. As a whole, the fund house has seen the second biggest outflows among asset managers with £5.5 billion withdrawn from its funds in the year to date, just behind M&G.

Baillie Gifford's Diversified Growth and Multi Asset Growth funds have just switched their Investment Association sector from “Specialist” to “Targeted Absolute Return” despite the woes of the sector, epitomised by the outflows seen by Standard Life Global Absolute Return.

Woodford Latest

While the Woodford Equity Income fund remains gated for another two months, the closed-end Patient Capital (WPCT) has published half-year results to the end of June 2019.

Net assets fell from £807 million at the end of 2018 to £654 million. In that period, the net asset value dropped from 97.61p to 72p, a fall of 26%, while the share price has fallen from 82p to 56p, a slide of 31%. The trust’s shares are now at 42p and sit at a discount to NAV of more than 30%. The Trust’s board said it is still evaluating Woodford’s position as manager.

Elsewhere, Liontrust completed its £40 million takeover of Neptune on October 1, a deal that was announced in the summer. The Neptune brand has been retired, while founder Robin Geffen and James Dowey have moved over to Liontrust.

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James Gard  is content editor for Morningstar.co.uk