Jupiter European Growth

European companies with a global reach

Europe is one of the world’s key economic regions and is home to many leading global companies as well as a host of smaller and medium-sized specialists. European equities warrant their place in any well-diversified investment portfolio.

Jupiter’s European Growth gives investors access to a concentrated portfolio of companies with high quality characteristics having the potential to deliver returns significantly above the average growth of the market. These companies are European by heritage, but their footprint is global for the most 

The fund is co-managed by fund managers Mark Nichols and Mark Heslop, alongside fund manager Phil Macartney and assistant fund manager Sohil Chotai with additional support from analyst Nikisha Mistry. The team is cognitively diverse and follows a disciplined and iterative investment process resulting in a constant competition for the fund’s capital. Everyone in the team is a company analyst.
European companies with a global reach
Buy companies, not countries
Whatever one’s opinion of the political and economic fortunes of Europe, it should be remembered that equity investors don’t buy countries, they buy companies, and Europe is home to many of the world’s best. The fund management team put investors’ capital to work in some of the highest-quality businesses around, capitalising on global opportunities and which are not solely reliant on domestic growth in Europe for their long-term fortunes.
Conviction matters
The European Growth team has the freedom to seek only the best quality European companies on behalf of the fund’s investors. The portfolio is therefore focused on their highest conviction ideas, resulting in a concentrated portfolio of about 35–45 companies.
The nature of competition
Understanding the nature of competition within an industry is vital to the team’s long-term approach. Industries where many businesses sell a similar product often face intense competition that results in commoditisation and anaemic long-term returns on capital. At the other extreme, industries that enjoy a natural monopoly often see their profitability determined by regulators. Somewhere in the middle, the team can identify industries that operate in quasi-oligopolies where profitability can be sustained. Businesses that can generate these sustainable and growing cashflows tend to have the opportunity to reinvest in their businesses for more growth in the future and deliver higher investment returns that are not simply competed away.
High-quality franchises with a growth focus
The European Growth team targets businesses where they have identified high barriers to entry, sustainable competitive advantages and attractive industry economics. They invest in these strong, high-quality companies, allowing the economics of the businesses to create a compounding effect over the long term. It is this long-term compounding of capital being reinvested in a business at a high rate of return that helps drive the growth in the value of a business and deliver attractive long-term growth for investors.
The team fundamentally believes that equity returns are best understood at the micro level of the individual business. The microeconomics of businesses and of industries will determine long-term investment returns, not the macroeconomics of central banks, politicians and regulators.
Finally, the presence of a strong company management team whose interests are aligned with shareholders is key. Environmental, Social and Governance (ESG) factors are built into portfolio construction at every step from before investing to regular monitoring and engagement afterwards.

Sources of sustainable competitive advantage

Sources of substainable competitive advantage
Source: Jupiter
Identifying secular growth opportunities
The European Growth team’s time-intensive process begins with identifying companies with strong business models exposed to secular growth, with sustainable returns on capital and first-class management teams. The team are seeking genuine growth companies that will be long-term winners. Identifying such businesses is much harder than it would first appear and so requires a significant amount of effort and insight. The European market is full of inefficiencies and the team’s focus on exploiting this allows them to consistently find businesses that are undervalued relative to their long term prospects, giving rising to healthy competition with those ideas that already exist in the portfolio. They are always on the hunt for these new ideas.
Europe is also home to some exceptional smaller companies
For investors operating in a low-growth world, perhaps the most attractive feature of European smaller companies is that they can offer a pure exposure to areas of secular growth. Indeed, they can often be global leaders operating in specialist niche markets. Click here to read more.
Stewardship of client capital: Environmental, Social & Governance
Capital has created wealth that a good society will wish to use wisely. As such, Environmental, Social and Governance (ESG) factors are built into portfolio construction at every step. Supported by Jupiter’s highly experienced corporate governance team, Mark Nichols, Mark Heslop and their colleagues take an active approach to ESG questions, engaging with management – often away from the limelight – on the basis that top performers always aspire to achieve even better outcomes. The European team considers ESG elements as important building blocks for long-term value creation, and won’t invest in a company until they have met with management to understand the alignment between business managers and shareholders.
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Jupiter Pan European Smaller Companies

European is home to some exceptional smaller companies
For investors operating in a low-growth world, perhaps the most attractive feature of smaller companies within Europe is that they can offer a pure exposure to areas of secular growth. Indeed, they can often be global leaders operating in specialist niche markets.

Mark Heslop, lead manager of the Jupiter Pan European Smaller Companies, believes the team’s unique in-depth analysis and understanding of the value-creation factors in companies offer compelling opportunities.

Smaller companies, hidden gems
With the backdrop of a low growth world, European smaller companies can offer investors a highly attractive combination of a purer exposure to areas of secular growth while avoiding the pitfalls that come with added complexity and bureaucracy of being a large organisation. Indeed, they can often be global leaders at their size operating in specialist niche markets. Unlike the larger companies that are more complex and often less nimble, many European smaller companies are owner-managed businesses with an instinctive focus on investing for the long term. European smaller companies have two further attractions: first, they can be under researched by mainstream analysts and second, being smaller they have the ability to grow faster than megacaps.

Why smaller companies?

Why smaller companies?
Smaller companies are not ‘small’ by any means. At Jupiter, the team defines European smaller companies as those that at the time of investment have a market capitalisation smaller than the 300th company in the FTSE World Europe Index (approximately €10bn) – a universe of over1100 investible European-listed equities.
High-quality European companies

Through bottom-up stock selection Mark and the team seek out companies that have:

 

  • Specific products or services that are desirable around the world
  • Strong, high-quality business franchises exposed to global secular growth trends
  • The ability to adapt quickly and reap benefits of change
  • Sustainably high returns on invested capital
  • Regional or global leadership in their markets
  • First class management teams whose interests are aligned with shareholders
  • A focus on long-term cash-flows, not short-term earnings
  • Active engagement with investors to seek ways to improve ESG factors.
A wealth of experience
Clients may benefit from Mark Heslop’s long and high-quality track record running European and global smaller company strategies. His tried and tested approach seeks hidden gems often underappreciated and poorly covered by the market. Only the highest conviction ideas make it into the fund. Having a team-based approach ensures consistent application of the desk’s investment philosophy applied to the bottom 20% of the quoted European equity market. The result is a well-spread yet focused fund of some 50–60 holdings.

Having carefully selected the companies, growth in shareholder returns comes from the ability of the businesses to compound their returns in capital in the long run, rather than from re-ratings or turnaround situations, both of which can be temporary in nature. A consequence of this buy and hold approach is that the fund has a low turnover.
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Important information

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.

 

Jupiter European Growth

The fund invests in a small number of holdings and as such carries more risk than funds spread across a larger number of holdings. This fund invests mainly in shares and it is likely to experience fluctuations in price which are larger than funds that invest only in bonds and/or cash. The KIID and Prospectus are available from Jupiter on request. This fund can invest more than 35% of its value in securities issued or guaranteed by an EEA state.

Jupiter Pan European Smaller Companies

The fund invests in smaller companies, which can be less liquid than investments in larger companies and can have fewer resources than larger companies to cope with unexpected adverse events. As such price fluctuations may have a greater impact on the fund. In difficult market conditions, it may be harder for the manager to sell assets at the quoted price, which could have a negative impact on performance.

This fund can invest more than 35% of its value in securities issued or guaranteed by an EEA state. The KIID and Prospectus are available from Jupiter on request.

Click here for important information regarding indices.

Meet the team

Jupiter European Growth Team

Mark Nichols – Prior to joining Jupiter, Mark managed European equity portfolios at Columbia Threadneedle and before that at BMO Global Asset Management (F&C). He began his investment career in the European equities team at Invesco in 2001.

Mark Heslop – Mark joined Jupiter in September 2019 as a European equity manager and smaller companies specialist. Prior to joining Jupiter, Mark was an equity fund manager at Columbia Threadneedle for 11 years where he managed a global smaller companies and a European smaller companies. He began his investment career as a chemicals and industrials analyst at Citi in 1999.

Phil Macartney – Phil joined Jupiter in 2020 and is a fund manager in the European Equities team. Before joining Jupiter, Phil worked at Columbia Threadneedle where he worked for five years as a fund manager on the UK Equities team. He began his investment career in 2008 as a pan-European research analyst at Moore Capital LP.

Sohil Chotai – Sohil joined Jupiter in October 2019 as an assistant fund manager. Prior to joining Jupiter, Sohil worked in the European equity team at Columbia Threadneedle as an analyst and deputy fund manager where he worked alongside Mark Heslop and Mark Nichols on smaller company and European growth strategies. He began his career on the graduate scheme at M&G Investments.

Nikisha Mistry – Nikisha joined Jupiter in July 2020 as an analyst in the European equities team. Prior to joining Jupiter, Nikisha began her career at Merian Global Investors, as an equities analyst on the European ex-UK smaller companies strategy. She has a degree in Economics and Management from Oxford University.

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