We do not make forecasts – neither at a company nor a macro level.
We review the evidence associated with four key fundamental and market related company characteristics:
Talking Factsheet
Jupiter Origin
Tarlock Randhawa gives an overview of Jupiter Origin’s investment process, how the team works together, and how they seek consistency over time.
Hello. I’m Tarlock Randhawa, Investment Manager at Jupiter. The Jupiter Origin investment strategy seeks to deliver consistency of outcomes as a result of a tightly specified investment process, which applies the team's judgment to hard evidence. We do not make forecasts - neither at a company nor at a macro level. Instead, we look at the evidence.
Our aim is to generate returns better than the benchmark, But we do not use the index as a starting point. Instead, our investment process is designed to produce outcomes with highly consistent style characteristics which we firmly believe will lead to outperformance over time. As you might expect given the characteristics we seek out, our portfolios have always had strong style tilts to above average return on capital, above-average earnings and sales growth, reasonable valuations and strong current share price momentum. Our portfolios will likely underperform in periods when the market is (in our view) irrational and led by low quality companies, and during periods of rapid market rotations.
Needless to say, we always stick to our process, so clients will always get the attractive portfolio characteristics they expect. We believe that portfolios should be built from the bottom up, not from the top down. Our process starts with an automated screen and ranking, based on four measurable characteristics: high profitability and growth, attractive relative value, strong earnings revisions, and share price trend. A stock must score well on a balance of all four criteria in order to gain inclusion in our portfolios. Once the screening has been concluded, our due diligence process begins. Each member of the team independently reviews the whole due diligence list. Each of us focuses only on the four relevant characteristics and reorders the list in their own order of preference. Combining the individual rankings creates the team list which forms the basis of that month's trading decisions.
We believe in organisational alpha, What do we mean by that? It's the value added by carrying out the human part of our investment process in a wholly objective and disciplined way. Developed over more than two decades, our process is designed to minimise psychological bias. We take collective responsibility for portfolio decisions. Ours is a genuinely team-based approach. The issue of position size is often an afterthought in conventional investment processes. We regularly compare and rank the entire universe of stocks at a single point in time, using a uniform data set. Each month we create portfolios that fully reflect our convictions. Our portfolios will likely underperform in periods when the market is (in our view) irrational and led by low quality companies, and during periods of rapid market rotations. Needless to say, we always stick to our process, so clients will always get the portfolio characteristics they expect.
Four reasons for considering Jupiter Origin
HIGH PROFITABILITY AND GROWTH
A clear history of high return on investment and underlying asset growth
ATTRACTIVE RELATIVE VALUE
A share price which is discounting much lower future profitability
STRONG EARNINGS REVISIONS
A consistent pattern of upgrades in analysts’ EPS estimates
SHARE PRICE TREND
Positive relative strength versus the market average
A stock must score well on a balance of all four criteria in order to gain inclusion in our portfolios.
Typically, our monthly screening process reduces a universe of 1,500 stocks to a subset of 150 candidates for our Global Emerging Markets strategy; and a universe of 4,500 stocks to a subset of 250 candidates for our Global Smaller Companies strategy.
We do what we say we will do.
Our investment process is designed to produce outcomes with stable characteristics.
As you might expect, our portfolios have always had strong style tilts to above average return on capital, above-average earnings and sales growth, reasonable valuations and strong current share price momentum.
By contrast, we are flexible on regional and sector allocation. Our regional and sector positions will change as the evidence changes.
Our portfolios will likely underperform in periods when the market is (in our view) irrational and led by low quality companies, and during periods of rapid market rotations. Needless to say, we always stick to our process, so clients will always get the portfolio characteristics they expect.
Jupiter Origin Global Emerging Markets Equity strategy portfolio style characteristics compared to MSCI Emerging Markets index
Jupiter Origin Global Smaller Companies strategy portfolio style characteristics compared to MSCI AC World Small Cap index
The charts above show the extent to which the portfolios are tilted towards key style metrics relative to their benchmarks. The scale is expressed in standard deviation terms. You will see strong tilts towards growth and revisions (green), quality and profitability (blue) and momentum (red) with value metrics (black) much closer to the benchmark, reflecting the company characteristics we are consistently seeking to capture.
Jupiter Origin strategies
Strategy specific risks
- Investment risk - there is no guarantee that the strategies will achieve their objectives. A capital loss of some or all of the amount invested may occur.
- Company shares (i.e. equities) risk - the value of Company shares and similar investments may go down as well as up in response to the performance of individual companies and can be affected by daily stock market movements and general market conditions.
- Currency (FX) risk – The strategies 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.
- Smaller companies risk - smaller companies are subject to greater risk and reward potential. Investments may be volatile or difficult to buy or sell.
- Emerging markets risk - Emerging markets are potentially associated with higher levels of political risk and lower levels of legal protection relative to developed markets. These attributes may negatively impact asset prices.
- Derivative risk - the strategies 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 strategies.
- 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.
- Liquidity Risk (less liquid securities) - some investments may be hard to value or sell at a desired time and price. In extreme circumstances this may affect the Fund’s ability to meet redemption requests upon demand.
- ESG - Investments are selected or excluded on both financial and non-financial criteria. The strategies’ performance may differ from the broader market or other strategies that do not utilise ESG criteria when selecting investments.
Important Information
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. 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 Fund Managers at the time of writing, are not necessarily those of Jupiter as a whole and may be subject to change.
Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given.
Issued in the UK by Jupiter Asset Management Limited, 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, the Management Company), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier.
Issued in Hong Kong by Jupiter Asset Management (Hong Kong) Limited (JAM HK) and has not been reviewed by the Securities and Futures Commission.
No part of this document may be reproduced in any manner without the prior permission of JAM, JAMI or JAM HK.
*In Hong Kong, investment professionals refer to Professional Investors as defined under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).and in Singapore, Institutional Investors as defined under Section 304 of the Securities and Futures Act, Chapter 289 of Singapore.