Jupiter investment update

The Jupiter UK small and mid-cap companies team has a long track record of delivering positive returns for investors. Initially working together at Old Mutual, the team left with a group of other fund managers through a management buy-out in 2018 to set up Merian Global Investors. In 2020 the team moved to Jupiter as part of the Merian group acquisition and were cited as one of the reasons Jupiter was keen to complete the deal.

Our analysts meet with the team on an annual basis and monitor the performance as part of our sector-wide analysis, but currently have greater conviction in other smaller company fund managers so neither Jupiter UK Smaller Companies or Jupiter UK Mid Cap fund features on the Wealth Shortlist.

This is in part due to the underlying investments in unquoted companies. Both of these funds invest in unquoted companies, also known as unlisted equities, which don’t trade on a stock market.

They do this in two ways – through direct investment in these companies, such as Starling Bank which is held in both portfolios, and through shares in Chrysalis investment trust which in turn invests in both unquoted and quoted companies.

Unquoted companies are higher risk and can be considerably less liquid than those traded on established stock exchanges. This means these positions can be more difficult to sell.

Over the past year, the unquoted exposure within the funds has increased, particularly in the UK Mid Cap fund. This has in part been due to poor performance of the rest of the portfolio, meaning it fell in value, and unquoted proportion of the fund grew.

Past performance is not a guide to the future. Source: *Lipper IM to 31/05/2022.

The Jupiter fund management team has a long track record of actively managing funds with unquoted companies in the portfolios. But we think clients should be aware that these allocations add liquidity risk to a fund, this means that it can be difficult to sell the underlying holdings and could mean the managers have to accept a lower price for these assets.

The greater the allocation to unquoted, the greater the risk. At the time of writing, the allocation to direct unquoted within the UK Mid Cap fund is 8.1%, and within the UK Smaller Companies fund is 3.36%. This is in addition to an investment in the Chrysalis fund of 6.02% of the UK Mid Cap fund and 2.3% of the UK Smaller Companies fund. Investments in smaller companies also increases risk.

Please note, the UK Mid Cap fund invests in a relatively small number of companies – this means each one can have a meaningful impact on performance, but it increases risk.

This is not a recommendation to sell. Investors should ensure they are happy with the associated risks of investing in unquoted companies, and that these funds meet an investor’s investment objectives and attitude to risk.

If you’re not sure if an investment is suitable for your circumstances, please seek advice.

Note that as these funds do not feature on the Wealth Shortlist, investors will not automatically receive updates on the funds in the future.

Find out more about Jupiter UK Mid Cap, including charges

Jupiter UK Mid Cap key investor information

Find out more about Jupiter UK Smaller Companies, including charges

Jupiter UK Smaller Companies key investor information