May 2012 Citywire Pan European Investment Conference Fairmont Le Montreux Palace, 9th – 11th May 2012 Jupiter Dynamic Bond SICAV Presented by: Ariel Bezalel, Fund Manager Fixed Interest Team & Fund Management Director Evelyn Lederle, Senior Sales Manager, Switzerland Daniel Blum, Sales Manager, Europe FOR PROFESSIONAL INVESTORS ONLY. NOT FOR RETAIL INVESTORS.
1 Agenda Jupiter People Investment philosophy Process Performance Manager’s current thinking Valuations – Credit Still Appealing Stock Examples
2 Introduction to Jupiter Established in 1985 Assets under management 424 employees including Investment Trusts, £576m 65 Investment Professionals Private Clients, £1,757m One of Europe’s most successful and Segregated Mandates, £3,493m respected fund management houses, managing assets of £24.2bn Market cap £1.1bn* Mutual Funds, £18,351mSource: Jupiter 31.03.12. *Source: Bloomberg as at 31.03.12.
3 Industry recognition Jupiter’s range of awards – over 100 in the last 5 years alone – is a testament to our company-wide performance record* Jupiter’s asset management success… Talented team Investment philosophy Fundamental investment approach*Source: Jupiter, Includes Jupiter Unit Trust Managers Limited and Jupiter Asset Management Limited. Past performance is no guide to the future.
4 Our core investment beliefs Individual accountability and information sharing Leads to high conviction ideas Avoids biases of committees Freedom to invest Not restricted by house views or model portfolios Able to back individual judgements Portfolio risk controls Independent, in-house monitoring – Performance and Portfolio Analytics team Quarterly Portfolio Review committees, Monthly Investment Risk committees and quarterly Compliance Monitoring committees Focused on performance
5 Agenda Jupiter People Investment philosophy Process Performance Manager’s current thinking Valuations – Credit Still Appealing Stock Examples
6 Fund manager biographyProven, experienced manager with award-winning track record Over 15 years experience in sovereign and credit markets. He joined Jupiter Ariel Bezalel Asset Management in June 1997 as a member of the Fixed Interest team. Fund Manager, Fixed Interest Team Fund Management Director Has managed a Unit Trust within the IMA Sterling Strategic Bond sector since launch in 2008, and also manages the fixed interest component of two UK-domiciled bond / equity funds. Qualified in Economics at Middlesex University Supported by the Fixed Income and Multi Asset Team John Hamilton Rhys Petheram Nicole Weiss Head of Fixed Income Interest Team Fund Manager / Credit Analyst Credit Analyst 31 years market experience 11 years market experience 12 years market experience Miles Geldard Lee Manzi Head of Convertibles and Multi Asset Team Senior Portfolio Manager 27 years market experience 14 years market experience
7 Agenda Jupiter People Investment philosophy Process Performance Manager’s current thinking Valuations – credit still appealing Stock examples
8 Investment style Combines top-down macroeconomic views with bottom-up fundamental company research Seeks situations offering value and favourable risk / reward profile Emphasis on individual security selection, drawing on the expertise of Jupiters fixed interest and equity teams Invests for medium to long-term Flexible strategy and a broad investment mandate can drive returns
9 Jupiter Dynamic Bond Aims to achieve a high income with prospect of capital growth Combines top-down strategic asset allocation with bottom-up security selection ‘Go anywhere’ strategy: Global investment universe Is able to invest across a range of fixed income securities i.e.: Government bonds Investment grade bonds High yield bonds Preference shares Convertible bonds and other bonds Flexible duration approach Can invest in all parts of the ratings spectrum from investment grade to high yield At least 80 % of the currency is either denominated in the base currency or hedged back to the base currency Typically 60-80 securities
10 Fund details Luxembourg-domiciled UCITS SICAV, unsophisticated Institutional and retail share classes – (minimum investment €10m and €1,000 respectively) Daily dealing and pricing; cut-off at 1pm* (LUX time) Settlement period: T+3 EUR-based fund with USD, GBP and CHF share classes (passive currency hedging) Custodian – HSBC Securities Services (Luxembourg) S.A. Benchmark: Barclays Capital Euro – Aggregate Corporate Index Management fees: L Class 1.25% I Class 0.50%*We recommend that you submit orders before 12.45 in order to ensure that it is processed in time for the cut-off.
11 Jupiter Dynamic Bond Fund (SICAV) Class name and Class L US Class L Class L Swiss Class I US Class I Class I Swiss class currency Class L Euro Dollar Sterling Franc Class I Euro Dollar Sterling Franc ISIN LU0459992896 LU0459992979 LU0459993191 LU0750223447 LU0750223520 LU0750223876 LU0750223959 LU0750224098 WKN A0YC40 A0YC41 A0YC42 A1JUF3 A1JUF4 A1JUF5 A1JUF6 A1JUF7 Clearstream 45999289 45999297 45999319 000075022344 000075022352 000075022387 000075022395 000075022409 common code SEDOL B58YQ00 B56LFY0 B56LCL6 B7NFNX4 B7NFPD8 B7NM443 B7NM4P4 B7NM8G3 Benchmark .BCPEACOR .BCPEACOR .BCPEACOR .BCPEACOR .BCPEACOR .BCPEACOR .BCPEACOR .BCPEACOR ticker code Passive currency No Yes Yes Yes No Yes Yes Yes hedgingSource: Jupiter, 2012.
12 Agenda Jupiter People Investment philosophy Process Performance Manager’s current thinking Valuations – credit still appealing Stock examples
14 Idea generationSources of investment ideas: Existing holdings Valuation Other bonds in our universe Company specific News Flow General market news, sector related company news Yield curve analysis, interest rate / inflation Macro Analysis outlook, data flow etc. Supply / demand, flows, sentiment, Market Forces CDS / share price behaviour Company specific / credit analysis Knowledge General marketTeam involvement; active discussion
15 Portfolio features Based on UK-domiciled bond fund Effective yield: 6.45% (net basis) Duration of portfolio*: 3.52 years Invest in all parts of the ratings spectrum Credit rating: BBB+** Fund manager tends to have a 10% limit in convertibles 80% of assets must be in sterling or hedged back to sterling***Source: HSBC 29.02.12, Institutional class. Yields quoted are not guaranteed and may change in the future.*Source : Jupiter 29.02.12. **Source: Jupiter as at 31.03.12. ***Sector requirement
16 Portfolio features of the UK-domiciled bond fundChange in duration since launch Average Duration 6 5 Years 4 3 2 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12Source: Jupiter, 2012.
17 Portfolio features – Exploiting opportunities across the ratings spectrumBased on UK-domiciled bond fund Strategic asset allocation since launch Credit rating split Sovereign (long) Sovereign (short) High Yield Investment Grade Cash AAA AA A BBB BB B CCC CC D NR cash 120% 100% 90% 100% 80% 70% 80% 60% 60% 50% 40% 40% 30% 20% 20% 10% 0% 0% -10% -20% -20% -40% -30% Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11Source: Jupiter as at 29.02.12. The fund manager has the power to use derivatives but it is intended that these will only be used for efficient portfolio management andnot for investment purposes.
18 UK-domiciled portfolio breakdown 40% 60% 30% 50% 40% 20% 30% 10% 20% 0% 10% -10% 0% -20% -10% Media Financials Industrials Telecoms Rig Financing Technology Supranational Healthcare Consumer Non- Utilities Tobacco Packaging Discretionary Property Sovereign Cash Discretionary Consumer -20% -30% High Yield Investment Sovereign long Cash Sovereign short Grade 40% Based on UK-domiciled bond fund 30% 20% Average rating BBB 10% 0% – 0.9% exposure to GIPSI nations -10% -20% Australia Germany Poland Ireland Netherlands Switzerland Other* Cash Britain France Mexico Czech SNAT Norway DenmarkSource: Jupiter as at 29.02.12. The fund manager has the power to use derivatives but it is intended that these will only be used for efficient portfolio management andnot for investment purposes.
19 Agenda Jupiter People Investment philosophy Process Performance Manager’s current thinking Valuations – credit still appealing Stock examples
20 Track record – UK-domiciled bond fund Ranked 2nd in sector since launch (02.06.08) UK-domiciled bond fund GB 53.35 IMA Sterling Strategic Bond TR in GB 23.71 60 50 40 30 % Growth 20 10 0 -10 -20 -30 Jun 08 May 09 Apr 10 Mar 11 Mar 12Source: FE, GBP, bid to bid, net income reinvested to 31.03.12. Fund launched 02.06.08. Ranked 2 / 55 in IMA Sterling Strategic Bond sector sincelaunch. Past performance is no guide to the future.
21 Track record: UK-domiciled bond / equity fund – fixed income component UK-domiciled bond / equity fund 127.9 Iboxx Non Gilt Index 124.0 140 130 120 110 100 90 80 Nov 06 Jun 07 Jan 08 Aug 08 Mar 09 Oct 09 May 10 Dec 10 Jul 11Source: Jupiter, offer to offer to 31.12.11. Assumes TER of 1.75%. Past performance is no guide to the future.
22 Track record – UK-domiciled bond fund Performance Cumulative 1 year % Since launch % UK-domiciled bond fund 6.4 53.4 IBOXX Stg Non Gilts All Maturities 8.8 30.5 IMA Sterling Strategic Bond sector average 5.1 23.7 Sector ranking 21 / 68 2 / 55 Discrete years 2009 % 2010 % 2011 % UK-domiciled bond fund 42.5 11.2 4.5 IBOXX Stg Non Gilts All Maturities 10.8 8.4 6.9 IMA Sterling Strategic Bond sector average 20.8 8.1 2.7 Sector ranking 3 / 57 11 / 63 21 / 68Source: FE, bid to bid, net income reinvested to 31.03.12. Fund launched 02.06.08. Past performance is no guide to the future.
23 Track record – UK-domiciled bond fund Monthly returns since launch UK-domiciled bond fund IMA Sterling Strategic Bond TR in GB 8 6 4 2 % Growth 0 -2 -4 -6 -8 -10 Jun 08 Nov 08 Apr 09 Sep 09 Feb 10 Jul 10 Dec 10 May 11 Oct 11 Mar 12Source: FE, bid to bid, net income reinvested 30.06.08 to 31.03.12. Fund launched 02.06.08. The fund manager has the power to use derivatives but it isintended that these will only be used for efficient portfolio management and not for investment purposes
25 Portfolio thoughts – where are we now: the debt-equity clockSource: Morgan Stanley Equity & Credit Strategy.
26 Portfolio thoughts – high yield pricing in decent downturn in economic growth EUR & USD HY benchmark spreads US High Yield European High Yield High yield still pricing 2500 in a slowdown Geographic exposure still 2000 important here. Top down macro fundamentals for 1500 much of Europe still poor Subordination continues 1000 900bps is the magic number to be important. Still have preference for secured debt but parts of this 500 market now look rich 0 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Dec 11Source: Bloomberg, JP Morgan as at 16.03.12. The above commentary represents the views of the Fund Manager at the time of the presentation and may besubject to change in the future, particularly during periods of rapidly changing market circumstances.
27 Jupiter’s fixed income team John Hamilton Ariel Bezalel Fund Management Director, Fund Manager, Fixed Interest Jupiter Asset Management Ltd. Team Fund Management Director Current role Head, Fixed Interest Team Current role Fund Manager Current Manager of two UK-domiciled bond funds and Current Manager of UK-domiciled bond fund and fixed interest responsibilities institutional assets responsibilities component of two UK-domiciled bond/equity funds 1991 – Jupiter Asset Management 1999 – Jupiter Asset Management Head, Fixed Interest Team Fund Manager, Fixed Interest Team 1987 – 1 991 Tyndall Investment Management Ltd. 1998 – 1999 Jupiter Asset Management Director and Fund Manager, Fixed Interest Assistant Fund Manager, Fixed Interest Team 1981 – 1987 London Life Association Qualifications Economics (Middlesex University) Manager, Fixed Interest 1979 – 1981 Laurie Millbank Gilt-edged department Qualifications Mathematics (London University)
28 Jupiter’s fixed income team Rhys Petheram Nicole Weiss Fund Manager, Credit Analyst, Jupiter Asset Management Ltd. Jupiter Asset Management Ltd. Current role Fund Manager / Credit Analyst Current role Credit Analyst Current Co-Manager of UK-domiciled bond fund and Manager Current Credit Analysis responsibilities of the Fixed Income portion of UK-domiciled responsibilities bond/equity fund 2011 - Jupiter Asset Management - Credit Analyst 2010 – Jupiter Asset Management Fund Manager 2010 - 2011 Jupiter Asset Management - Assistant Credit Analyst 2006 – 2010 Jupiter Asset Management 2007 – 2010 Jupiter Asset Management Assistant Fund Manager Fixed Interest Administrator, additional dealing function from 2008 – 2010 2004 – 2006 Moody’s Investor Services Credit Analyst, Utilities 2006 – 2007 Fidelity International, UK, Associate Bank of America Liaison & Clearstream Settlement Department 2001 – 2004 Towers Perrin Australia (acquired by Frank Russell) Analyst 2004 – 2006 Landeskrankenhilfe VVaG in Germany, Associate Insurance Contract Department Qualifications Bachelor of Commerce Finance (University of Melbourne) 2000 – 2004 Deutsche Bank AG in Germany, Diploma in Modern Languages (Indonesian) Customer Consultant Retail Banking (University of Melbourne) Chartered Financial Analyst Qualifications Graduate in Business Economics (VWA Lüneburg, Germany)
29 Jupiter’s convertibles and multi asset team In the 13 years prior to his appointment Miles built and managed global convertibles, fixed Head of Team income and multi asset franchises. In 2009, he was recognised in the Sauren Awards with & Fund Manager: three gold medals in the convertibles category, two gold medals in the absolute return Miles Geldard category and two gold medals in the multi strategy international category Jupiter Asset Management Ltd. Having spent much of his early career managing derivative teams in the Far East, Miles became an adviser on fixed income portfolio management and foreign exchange to the Central Bank of Botswana in 1994. In 1997 he joined JP Morgan Asset Management (formerly Jardine Fleming) in Hong Kong and became Head of Fixed Income, Currencies, Convertibles and Balanced In 2004 Miles moved to London and became Chief Investment Officer and Head of the Global Multi Asset Group and Global Strategy Team at JP Morgan Asset Management. In addition to building the convertibles business, he also built and managed the JPM Capital Preservation Fund, a global multi asset absolute return fund. Miles left JP Morgan in 2006 to join RWC Partners (previously MPC Investors), where he founded and headed the multi asset and convertibles team Lee started his fund management career at JP Morgan Asset Management (formerly Fund Manager: Flemings) in 1998, working in the fixed income team. After spells working on the European Lee Manzi fixed income team and UK desk, he took over the management of the firm’s UK Sterling accounts before joining the Global Portfolios Group in 2001 where he managed the fixed income portion of the balanced funds Jupiter Asset Management Ltd. He then worked in the Global Multi Asset Group with Miles, focusing primarily on fixed interest and convertibles In 2006 he moved to MPC / RWC to work with Miles as a portfolio manager
30 Disclosure Jupiter Asset Management Limited (‘JAM’) is registered in England and Wales (no. 2036243). The registered office is 1 Grosvenor Place, London SW1X 7JJ. JAM is authorised and regulated by the Financial Services Authority in the UK whose address is 25 The North Colonnade, Canary Wharf, London E14 5HS. This presentation is intended for investment professionals and not for the benefit of private retail investors. However any one attending the presentation or who has the opportunity to view the accompanying slides should bear in mind that the value of an investment in a unit trust and the income from it can go down as well as up. It may be affected by exchange rate variations and you may not get back the amount invested. Initial charges are likely to have a greater proportionate effect on returns if investments are liquidated in the shorter term. Quoted yields are not guaranteed. Current tax levels and reliefs will depend on the nature of the holding and details are contained in the key features documents. Past performance should not be seen as a guide to future performance. A significant proportion of the portfolio may be held in higher yielding bonds. These have an increased risk of capital erosion due to a higher possibility of default by the bond issuer. Changing market conditions and interest rate levels can also have a larger impact on the values of high yielding bonds than on other bonds. Due to the overall structure of the portfolio, the level of quarterly income payments will not be constant and will fluctuate. Quoted yields are not guaranteed. For your security we may record or randomly monitor all telephone calls. If you are unsure of the suitability of an investment please contact your financial advisor. Any data or views given should not be construed as investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given.