Challenge
Seeking a unique approach and idiosyncratic returns in UK value equities investing.
Solution
The Jupiter UK Dynamic Equity strategy generates returns from investing in business transformation – underperforming companies undergoing strategic and management change and on the way to recovery. The fund managers support and engage with company management as they execute self-help plans that can return their businesses to earnings growth and drive market upgrades.
The strategy aims to invest in undervalued but good companies with a history of generating cash and higher financial returns -- and with quality characteristics such as owning unique assets and having pricing power. The fund managers call this the best of value and growth investing. They avoid distressed companies and businesses in declining industries.
The strategy has a track record of generating idiosyncratic returns, reflecting strict stock selection and company-specific results that are less impacted by broader market conditions. The fund managers intend for the strategy to be a core holding for UK equities in a portfolio.
The ideal business transformation
5 pillar approach creates margin of safety and competitive advantage
| Right business | Right problems | Right valuation | Right time | Right management |
|---|---|---|---|---|
| Advantaged | Transformation not turnaroud | PE/PB lows | Transitioning board | Objective & urgent |
| Cash generative | Capital misallocation | Cashflow yield highs | Acute stakeholder frustration | Bold & decisive |
| Infrastructure-like | Cash and margin indiscipline | Pessimistic forecasts | Uncertain future | Focus & discipline |
| Hidden assets | Underexploited competitive position | Lowest common denominator effect | Agency for change | Open & engaged |
Please note: The views expressed are those of the fund manager at the time of publication and may change in the future
Benefits
- Value creation through business recovery
- Idiosyncratic, through-cycle returns
- Best of value and growth investing
- Can be a core holding in UK equities
Fund specific risks
- 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.
- Market Concentration Risk (Geographical Region/Country) - Investing in a particular country or geographic region can cause the value of this investment to rise or fall more relative to investments whose focus is spread more globally in nature.
- Derivative Risk - the strategy may use derivatives to reduce costs and/or the overall risk of the strategy (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 strategy.
- 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 strategy.
- Counterparty Risk - the risk of losses due to the default of a counterparty e.g. on a derivatives contract or a custodian that is safeguarding the strategy’s assets.
Important Information
This is a marketing communication. This document is intended for investment professionals and is not for the use or benefit of other persons. 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 individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Holding examples are for illustrative purposes only and are not a recommendation to buy or sell. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI.