It is nice to have alternatives, especially in periods of market volatility, when stock and bond returns are under strain. Inflation, central bank rate hikes, geopolitical conflict and concern about the pace of economic growth have forced many investors to review their financial goals. In these times, it can make sense to look beyond stock and bond funds that only take long positions (buying a security that will generate a profit when the share or bond price rises and a loss when the price falls). Some alternative investment strategies can take long positions and short positions (buying a security that will generate a profit when the price falls and a loss when it rises). These strategies can supplement traditional stock, bond and cash allocations. Alternative investments can include hedge funds, funds that hold private or unlisted securities, natural resources such as gold and other commodities and real estate (property).

 

Many of these types of investments aim to generate positive returns regardless of the stock and bond market backdrop. Alternatives also tend to have a low correlation to equities and bonds, which means the returns they make are unrelated to the returns of those major asset classes. In this way, they can be used to diversify investors’ portfolio returns and help investors achieve their long-term goals.

 

At Jupiter Asset Management, we have a range of actively managed alternative investment strategies that aim to offer uncorrelated returns. Three funds that we highlight here are: Jupiter Merian Global Equity Absolute Return Fund (GEAR), Jupiter Strategic Absolute Return Bond Fund (SARB) and Jupiter Gold & Silver Fund.

Jupiter Merian Global Equity Absolute Return Fund (GEAR)

The Jupiter Merian Global Equity Absolute Return Fund (GEAR) is a global market-neutral equities strategy designed with the objective to generate positive returns even in challenging environments. Market neutral means that the fund aims to hold long positions (buying a security that will generate a profit when the price rises and a loss when the price falls) in balance with short positions (buying a security that will generate a profit when the price falls and a loss when it rises). This enables the fund to seek returns that are uncorrelated with stock and bond markets. It also seeks to control volatility (the amount by which the fund’s returns fluctuate). The fund is also “macro agnostic”, meaning the fund managers do not attempt to predict macroeconomic outcomes: instead, GEAR’s investment process is evidence-based and data-led, using a diversified set of stock selection criteria. The fund analyses thousands of shares daily as it seeks to find the best portfolio for the current market environment.

Jupiter Gold & Silver Fund

The Jupiter Gold & Silver Fund blends allocations to gold and silver (via holdings in listed gold and silver funds) with shares of mining companies. Gold and silver are apolitical currencies, in that they aren’t issued by central banks or governments, unlike dollars or pounds or euros. In times of high inflation, holding some gold may help to mitigate the effects of rising prices on an investment portfolio. Investors often overlook the potential benefits of monetary metals like gold and silver.

Jupiter Strategic Absolute Return Bond Fund (SARB)

The Jupiter Strategic Absolute Return Bond Fund (SARB) aims to deliver returns for investors regardless of where inflation is heading or what central bankers are doing. The fund invests across the full range of fixed-income securities and foreign exchange, and the investment team are able to tweak the portfolio to reflect changes in the market. The team can also take short positions (buying a security that will generate a profit when the price falls and a loss when the price rises) as well as long positions (buying a security that will generate a profit when the price rises and a loss when the price falls).

Fund specific risks

Jupiter Merian Global Equity Absolute Return Bond Fund

  • Investment risk – there is no guarantee that the Fund will achieve its objective. A capital loss of some or all of the amount invested may occur.
  • Furthermore, the Fund may exceed its volatility limit. A capital loss of some or all of the amount invested may occur.
  • Company shares (i.e. equities) risk – the value of Company shares (i.e. equities) 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. Other influential factors include political, economic news, company earnings and significant corporate events.
  • Derivative risk – the Fund uses derivatives to generate returns and/or to reduce costs and the overall risk of the Fund. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment. Derivatives also involve counterparty risk where the institutions acting as counterparty to derivatives may not meet their contractual obligations.
  • Currency risk – the Fund can be exposed to different currencies and may use techniques to try to reduce the effects of changes in the exchange rate between the currency of the underlying investments and the base currency of the Fund. These techniques may not eliminate all the currency risk. The value of your shares may rise and fall as a result of exchange rate movements.
  • Stock connect risk – the Fund may invest in China A-Shares through the China-Hong Kong Stock Connect (“Stock Connect”). Stock Connect is governed by regulations which are untested and subject to change. Trading limitations and restrictions on foreign ownership may constrain the Fund’s ability to pursue its investment strategy.

 

The fund may be subject to other risk factors, please see the Prospectus for further information.

 

This is a marking communication. Please refer to the latest sales prospectus of the fund and to the Key Investor Information Document (KIID), particularly to the fund’s investment objective and characteristics including those related to ESG (if applicable), before making any final investment decisions. These are available from the document library. 

Jupiter Gold & Silver Fund

  • Investment risk – there is no guarantee that the Fund will achieve its objective. A capital loss of some or all of the amount invested may occur.
  • Sector concentration risk – the Fund’s investments are concentrated in natural resource companies, and may be subject to a greater degree of risk and volatility than a fund following a more diversified strategy. Silver tends to outperform gold in a rising gold price environment and it tends to underperform gold when sentiment moves against the sector.
  • Strategy risk – as the Fund invests in other collective investment schemes, which themselves invest in assets such as bonds, company shares, cash and currencies, it will be subject to the collective risks of these other funds. This may include emerging markets risk and smaller companies risk.
  • Company shares (i.e. equities) risk – the value of Company shares (i.e. equities) 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. Other influential factors include political, economic news, company earnings and significant corporate events.
  • Concentration risk (number of investments) – the Fund may at times hold a smaller number of investments, and therefore a fall in the value of a single investment may have a greater impact on the Fund’s value than if it held a larger number of investments.
  • Smaller companies risk – smaller companies are subject to greater risk and reward potential. Investments may be volatile or difficult to buy or sell.
  • Liquidity risk – some investments may become 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.
  • Currency risk – the Fund can be exposed to different currencies. The value of your shares may rise and fall as a result of exchange rate movements.
  • Derivative risk – the Fund may use derivatives to generate returns as well as to reduce costs and/or the overall risk of the Fund. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment. Derivatives also involve counterparty risk where the institutions acting as counterparty to derivatives may not meet their contractual obligations.

 

The fund may be subject to other risk factors, please see the Prospectus for further information.

 

This is a marking communication. Please refer to the latest sales prospectus of the fund and to the Key Investor Information Document (KIID), particularly to the fund’s investment objective and characteristics including those related to ESG (if applicable), before making any final investment decisions. These are available from the document library. 

Jupiter Strategic Absolute Return Bond Fund

  • Investment risk – while the Fund aims to deliver above zero performance irrespective of market conditions, there can be no guarantee this aim will be achieved.
    Furthermore, the actual volatility of the Fund may be above or below the expected range, and may also exceed its maximum expected volatility. A capital loss of some or all of the amount invested may occur.
  • Emerging markets risk – less developed countries may face more political, economic or structural challenges than developed countries.
  • Credit risk – the issuer of a bond or a similar investment within the Fund may not pay income or repay capital to the Fund when due. Bonds which are rated below investment grade are considered to have a higher risk exposure with respect to meeting their payment obligations.
  • CoCos and other investments with loss absorbing features – the Fund may hold investments with loss-absorbing features, including up to 20% in contingent convertible bonds (CoCos). These investments may be subject to regulatory intervention and/or specific trigger events relating to regulatory capital levels falling to a pre-specified point. This is a different risk to traditional bonds and may result in their conversion to company shares, or a partial or total loss of value.
  • Bond Connect Risk – The rules of the Bond Connect scheme may not always permit the Fund to sell its assets, and may cause the Fund to suffer losses on an investment.
  • Interest rate risk – investments in bonds are affected by interest rates and inflation trends which may affect the value of the Fund.
  • Liquidity risk – some investments may become 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.
  • Derivative risk – the Fund uses derivatives to generate returns and/or to reduce costs and the overall risk of the Fund. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment. Derivatives also involve counterparty risk where the institutions acting as counterparty to derivatives may not meet their contractual obligations.
  • Currency risk – the Fund can be exposed to different currencies. The value of your shares may rise and fall as a result of exchange rate movements. 

 

The Fund may be more than 35% invested in Government and public securities. These can be issued by other countries and Governments. Your attention is drawn to the stated investment policy which is set out in the Fund’s prospectus. 

The fund may be subject to other risk factors, please see the Prospectus for further information.

This is a marking communication. Please refer to the latest sales prospectus of the fund and to the Key Investor Information Document (KIID), particularly to the fund’s investment objective and characteristics including those related to ESG (if applicable), before making any final investment decisions. These are available from the document library.