 Jupiter Absolute Return Fund  Citywire Newcits Retreat 2010, The Four Seasons, Hampshire  Thursday 2nd & Friday 3rd Dece...
1 Jupiter Absolute Return Fund        Launched December 2009        Assets managed in excess of £600m        Seeks abs...
2 Risk controls        VaR limit of 20%        Gross limit of 150%        Net equity exposure limit of 60%        Ind...
3 Long/short offshore portfolio net & gross exposure since inceptionIncluded to demonstrate approach and active managemen...
4 Long/short offshore portfolioIncluded to demonstrate impact of approach and active management of exposure     Performa...
5 Long/short offshore portfolio monthly net returnsIncluded to demonstrate impact of approach and active management of ex...
6 Long/short offshore portfolio monthly net returnsIncluded to demonstrate impact of approach and active management of ex...
7 Long-term investment policy  Active fund management              Do not follow the herd                               ...
8 Long-term investment policy continued  Put conviction behind Best Ideas     Not afraid of significant holdings        ...
9 Reasons for optimism   Strong growth in emerging markets and relatively low debt    levels at the national and consume...
10 Reasons for caution   Interest rates can only rise in the West   Inflation may return as a problem especially given ...
11 Medium term investment conditions        Emerging market assets and currencies are by far favoured         over the d...
12 Shorter term investment conclusions        The equity market will perform well if there is reasonable         stabili...
13 Historic valuation levels     UK Gilt/12-Month Forward Equity Earnings Yield           UK 12m Fwd Equity Earnings Yie...
14 Gross debt as percentage of GDP       2007%         2011 Forecast                                                     ...
15 Net debt as % of GDP                             United Kingdom    United States           Japan                      ...
16 Portfolio – Top long positions     Jupiter Absolute Return Fund            Fund size: £635m           Top long positi...
17 Portfolio – Breakdown     Sector breakdown                                          Geographical breakdown          ...
 Appendix
19 Appendix I: Fund specificationsJupiter Absolute Return Fund (JARF)    Investment objective: To generate          Laun...
20 Appendix II: Fund comparisonPhilip Gibbs’ unit trust funds                    Jupiter Absolute Return Fund            ...
21 Appendix III: Risk management – Value at Risk (VaR)    What is VaR?      Estimates the worst potential loss in the p...
22 Appendix III: Risk management – Value at Risk (VaR) (cont’d)    Different calculation methods      Absolute or relat...
23 Apendix IV: Jupiter Financial Opportunities FundRanked 2nd out of all unit trusts since launch     Performance 02.06....
24 Appendix V: Jupiter Financial Opportunities Fund     Performance since launch                 Jupiter - Financial Opp...
25 Appendix VI: Jupiter Financial Opportunities Fund     Calendar year performance                                      ...
26 DisclosureJupiter Unit Trust Managers Limited (‘JUTM’) and Jupiter Asset Management Limited (‘JAM’) are bothregistered...
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Jupiter asset management

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Jupiter asset management

  1. 1.  Jupiter Absolute Return Fund Citywire Newcits Retreat 2010, The Four Seasons, Hampshire Thursday 2nd & Friday 3rd December 2010 Presented by: Philip Gibbs, Fund Manager
  2. 2. 1 Jupiter Absolute Return Fund  Launched December 2009  Assets managed in excess of £600m  Seeks absolute returns through either investing in or taking advantage of overvaluations in equities, bonds, currencies and commodities. The latter however is a small part of the fund  The fund is an extension of the strategy employed by the manager in an offshore fund from March 2000 to June 2010  Not a market neutral fund but preference for avoiding too much directional risk  Employing strong risk frameworkSource: Jupiter as at 31.10.10.
  3. 3. 2 Risk controls  VaR limit of 20%  Gross limit of 150%  Net equity exposure limit of 60%  Individual equity position limit of 10%  5% positions limited to 40% of equity  Strong focus on liquidityNote: These are guidelines only. The fund can use the full UCITS III exposure limits.
  4. 4. 3 Long/short offshore portfolio net & gross exposure since inceptionIncluded to demonstrate approach and active management of exposure Long Short Net Gross 220% 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% -120% -140% -160% Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10Source: Jupiter as at 31.05.10. The above represents an offshore fund outside of the UCITS framework and therefore is displayed only for the purposesof demonstrating the Fund Managers experience and style.
  5. 5. 4 Long/short offshore portfolioIncluded to demonstrate impact of approach and active management of exposure  Performance since launch 450% Annual Return%1 Volatility %  Long/short offshore portfolio 16.5 19.8 400%  CS/Tremont Long/Short Equity 4.2 8.2 350%  HFR Equity Hedge 4.2 8.8 300%  FTSE All-Share -1.1 15.1 250%  DJ Stoxx 600 -4.3 16.9 % Growth 200% 150% 100% 50% 0% -50% -100% Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10Source: Jupiter, Bloomberg, CS/Tremont and HFR to 31.05.10. Fund launched 09.03.00. Long/short offshore portfolio performance and index returns are netof management and performance fees. The above represents an offshore fund outside of the UCITS framework and therefore is displayed only for thepurposes of demonstrating the Fund Managers experience and style. From 01.06.10. Guy de Blonay became lead manager of the fund.
  6. 6. 5 Long/short offshore portfolio monthly net returnsIncluded to demonstrate impact of approach and active management of exposure  US$ class Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2010 0.2% 1.2% -1.0% -0.2% 0.3% 0.5% 2009 2.0% 1.5% -6.1% -10.1% 0.2% -1.7% 2.6% 8.0% 7.4% -1.7% 1.0% 0.2% 1.9% 2008 8.6% 1.2% -3.1% -6.2% 3.0% 15.9% -15.3% -0.3% 2.2% 5.3% -0.4% 2.1% 10.3% 2007 2.5% -2.8% 2.0% 5.1% -1.4% 1.5% 3.6% -1.8% -0.4% 3.2% 1.7% 0.6% 14.8% 2006 11.6% 4.1% 5.0% 1.1% -5.4% -1.6% 0.9% 1.8% -1.6% 3.6% 0.00% 1.5% 23.4% 2005 1.3% 4.4% -1.8% -6.7% -1.7% 3.0% 1.9% -1.0% 2.9% -3.5% 6.8% 7.0% 12.4% 2004 0.4% 0.7% -1.9% 0.1% -2.1% 0.5% 0.7% 0.8% 1.3% 0.4% 2.7% -0.7% 2.7% 2003 0.1% 0.5% 0.9% 1.2% 1.7% 0.0% 0.6% 0.3% -1.3% 2.8% 0.8% 1.5% 9.5% 2002 3.7% 0.7% 0.5% 3.6% 5.0% 3.7% 1.4% 0.7% 1.2% -2.2% -0.6% -1.0% 17.8% 2001 3.0% 3.6% -2.7% 2.6% 4.3% -1.2% 0.1% 2.1% -5.1% -0.9% 1.3% -1.1% 7.9% 2000 41.1% -7.5% 0.7% 23.2% 6.8% -2.2% 7.0% -3.0% -4.4% 13.1% 86.9%Source: Jupiter as at 31.05.10. The above long/short represents an offshore fund outside of the UCITS framework and therefore is displayed only for thepurposes of demonstrating the Fund Managers experience and style. From 01.06.10. Guy de Blonay became lead manager of the fund.
  7. 7. 6 Long/short offshore portfolio monthly net returnsIncluded to demonstrate impact of approach and active management of exposure  £ class Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2010 0.3% 1.1% -0.8% -0.2% 0.3% 0.7% 2009 2.0% 1.5% -6.2% -9.6% -0.2% -1.6% 2.5% 8.6% 7.3% -1.6% 1.2% -0.0% 2.4% 2008 8.6% 1.3% -2.9% -6.0% 3.1% 15.6% -15.2% -0.1% 2.7% 6.2% 0.2% 2.1% 12.9% 2007 2.3% -3.0% 2.1% 5.0% -1.4% 1.9% 3.6% -1.9% -0.8% 3.1% 1.8% 0.8% 14.7% 2006 4.3% 4.8% 1.0% -5.4% -1.8% 0.8% 1.7% -1.6% 4.3% -0.1% 1.3% 9.2%  € class Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2010 0.3% 1.1% -0.8% -0.2% 0.2% 0.6% 2009 2.3% 1.7% -5.9% -10.2% 0.3% -1.6% 3.0% 7.6% 7.1% -1.6% 1.1% 0.0% 2.5% 2008 8.3% 1.2% -3.0% -6.0% 3.0% 15.9% -15.3% -0.2% 2.6% 6.2% -0.3% 1.8% 11.6% 2007 2.3% -3.0% 2.0% 4.9% -1.5% 1.7% 3.5% -1.9% -0.5% 3.1% 1.6% 0.6% 13.2% 2006 4.0% 4.6% 0.9% -5.6% -1.9% 0.8% 1.7% -1.6% 4.1% -0.2% 1.3% 8.0%Source: Jupiter as at 31.05.10. The above long/short represents an offshore fund outside of the UCITS framework and therefore is displayed only for thepurposes of demonstrating the Fund Managers experience and style. From 01.06.10. Guy de Blonay became lead manager of the fund.
  8. 8. 7 Long-term investment policy Active fund management  Do not follow the herd  Focus on macro themes as well Dual approach as stock and bond selection  Concentrate on out-of-favour investments Control risk and maximise upside on the long side and on liquid investments Challenge consensus estimates  Perform own company research and analysis High quality portfolio  Scrutinize balance sheets as well as earnings
  9. 9. 8 Long-term investment policy continued Put conviction behind Best Ideas  Not afraid of significant holdings  Focus on investments that can Transparency be clearly analysed  Reduce position size as shares Strong sell discipline approach their fair value Fund manager autonomy  No house lists  Fund manager has significant investments Alignment of interests in the fund and the fund strategy
  10. 10. 9 Reasons for optimism  Strong growth in emerging markets and relatively low debt levels at the national and consumer levels  Subdued interest rates in some regions due to problems in Western economies, especially in Hong Kong with dollar peg  Determination of western governments to support economies, unlike 2007 and 2008  Very low cash interest rates in the developed world  Generally low bond yields  Historically low equity valuations compared with bond yields
  11. 11. 10 Reasons for caution  Interest rates can only rise in the West  Inflation may return as a problem especially given demand for resources from the Far East  Government bond yields in the US and Japan look far too low  Economies in the US, Japan, the UK and Southern Europe are struggling in spite of very low interest rates and very high government debts and deficits. What happens if deficits are addressed or interest rates are forced up? Not a happy thought.
  12. 12. 11 Medium term investment conditions  Emerging market assets and currencies are by far favoured over the developed world  On a view of a few years it seems highly probable that a crisis will ensue as a result of developed world indebtedness. Governments may have to print so much money that they will unleash inflation. US and Japanese government bonds will probably perform terribly.  Western equities relying on Western consumers will face many problems as a result of this situation  The Swiss Franc and gold will probably perform exceptionally well. The dollar and the yen and sterling and the Euro look to have a dismal outlook.  Emerging market currencies in the Far East or currencies backed by resource based economies (such as Norway) are also preferredFund manager views at time of writing and will change in the future.
  13. 13. 12 Shorter term investment conclusions  The equity market will perform well if there is reasonable stability in Western economies because equity pricing reflects extreme nervousness. On the other hand it is also possible that a double dip materialises and shakes confidence.  Western government bonds are likely to perform poorly except in the short term in a double dip scenario  Corporate bonds look fairly priced but with attractions in the very high yield portion  The yen and the dollar will be poor except in a double dip scenario. The Swiss Franc looks a strong bet for either a more bullish or bearish scenario. Sterling looks unpromising in both scenarios.Fund manager views at time of writing and will change in the future.
  14. 14. 13 Historic valuation levels  UK Gilt/12-Month Forward Equity Earnings Yield UK 12m Fwd Equity Earnings Yield (100/10.0x P/E = 10.0%) UK 10-Year Gilt Yield = 3.0% 25 73-74 Bear Market Late 70’s EPS Boom 20 Credit Crunch 15 87 Crash 94 Bond Sell-Off Sept 10 LTCM 11th 75 Equity Early 80s Crisis Rally Bond Rally Debt-Funded 91 Gulf Takeover Margin 5 War Rally ‘67-‘69 TMT Bubble Equity Rally 0 65 70 75 80 85 90 95 00 05 10Source: MF Global Securities Limited Quantitative Equity Strategy.
  15. 15. 14 Gross debt as percentage of GDP 2007% 2011 Forecast 2007 % 2011 Forecast % Austria 62 82 Austria France 70 99 France Germany Germany 65 85 Greece Greece 104 130 Ireland Ireland 28 93 Italy Italy 112 130 Japan Japan 167 204 Netherlands Netherlands 52 82 Portugal Portugal 71 97 Spain United Kingdom Spain 42 74 United States United Kingdom 47 94 Asia United States 62 100 Central Europe Asia * 37 41 Latin America Central Europe ** 23 29 0% 25% 50% 75% 100% 125% 150% 175% 200% 225% Latin America *** 41 35Source: IMF, World Economic Outlook, OECD Economic Outlook, Wikipedia.*China, Hong Kong, SAR, India, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand.**The Czech Republic, Hungary and Poland.***Argentina, Brazil, Chile and Mexico.
  16. 16. 15 Net debt as % of GDP United Kingdom United States Japan 110 100 90 80 Net debt as % of GDP 70 60 50 40 30 20 10 0 -10 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: OECD Economic Outlook.Note: Net debt measures are not always comparable across countries due to different definitions or treatment of debt (and asset) components. First, thetreatment of government liabilities in respect of their employee pension plans may be different (see note to Annex Table 32). Second, the range of itemsincluded as general government assets differs across countries. For example, equity holdings are excluded from government assets in some countrieswhereas foreign exchange, gold and SDR holdings are considered as assets in the United States and the United Kingdom.
  17. 17. 16 Portfolio – Top long positions  Jupiter Absolute Return Fund Fund size: £635m Top long positions* % Barclays Bank 14% VRN PERP 7.07 Altria Group 9.95% 10/11/38 4.56 Sun Hung Kai Properties 2.73 Australia Government 5.75% 15/05/21 1.21 ETF Securities – Physical Gold ETF 1.18 Prudential 1.00 Rio Tinto 0.95 DnB NOR 0.93 BHP Billiton 0.80 Standard Chartered 0.74 Total 21.16Source: Jupiter as at 31.10.10. *Some of this exposure is through derivatives. Remaining exposure is through cash of various currencies. In addition tocash held in GBP, the fund holds notable long positions in JPY, NOK and USD.
  18. 18. 17 Portfolio – Breakdown  Sector breakdown  Geographical breakdown Short % Long % Short % Long % Real Estate Investments & Srvcs 3.33 United Kingdom -1.22 12.39 Banks 2.71 United States -12.88 4.56 Mining 2.37 Hong Kong & China 3.92 Commodities 1.18 Australia 1.21 Life Insurance 1.00 Norway 0.93 Financial Services 0.04 Turkey 0.45 General Retailers -0.68 Spain -0.68 Support Services -1.22 Ireland -3.37 Construction & Materials -3.37 Germany -4.22 Sub Total -5.27 10.63 Japan -24.54 Fixed Income -41.65 12.84 Total -46.92 23.47 Total -46.92 23.47Source: Jupiter as at 31.10.10.
  19. 19.  Appendix
  20. 20. 19 Appendix I: Fund specificationsJupiter Absolute Return Fund (JARF)  Investment objective: To generate Launch date 14 December 2009 an absolute return independent Launch price 50p (inclusive of FEL) of market conditions by investing on a global basis Annual accounting date 31 October Annual dividend By 31 December (if any income)  Derivatives: sector swaps, contracts for difference (CFDs), futures Deals Minimum investment: £500 for lump sum investments & £50 a month  Cash benchmark 3 month LIBOR for regular savers  IMA Absolute Return sector Initial charge 5.25% AMC 1.25%  Base currency: Sterling Performance fee: 15% outperformance above a hurdle  Dual priced (3 month LIBOR) and High Water Mark (which must be achieved before any  Accumulation units only performance fee may be applied)  Qualifies for ISAs and SIPPs
  21. 21. 20 Appendix II: Fund comparisonPhilip Gibbs’ unit trust funds Jupiter Absolute Return Fund Jupiter International Financials Fund Jupiter Financial Opportunities Fund Objective The Fund seeks to generate an To achieve long term capital growth To achieve long term capital growth absolute return independent of market principally through investment in principally through investment in conditions by investing on a global basis equities and equity related securities of equities of financial sector companies financial sector companies on an on an international basis international basis, but with the power to invest in other asset types when the Manager considers it appropriate for market conditions Benchmark Cash benchmark 3 month LIBOR FTSE Global Financials Index £ FTSE Financials Index Strategy Absolute return Full UCITS III powers to use derivatives Long only for investment purposes (long/short) and to preserve and grow capital in down markets Market cap bias Large and mid cap Large and mid cap, some small Large cap (>£3bn) Scheme category UCITS III (sophisticated) UCITS III (sophisticated) UCITS III (non sophisticated) Risk management Value at Risk Value at Risk Commitment approach
  22. 22. 21 Appendix III: Risk management – Value at Risk (VaR)  What is VaR?  Estimates the worst potential loss in the portfolio within a certain time period and with a certain amount of confidence  Internal Guidelines : 20% absolute VaR limit (or 2x benchmark for Jupiter International Financials) (99% confidence) over 20 day timeframe measured each day  Holding period: 1 month (20 days)  Observation period: minimum 1 year (250 days)  99% confidence implies a breach 1 out of every 100 twenty day periods  Jupiter uses 3 different VaR methodologies  Parametric – using standard deviation of portfolio returns  Monte Carlo – using random simulations of market scenarios  Historical Simulation – uses actual historical rates and revalues every position for each change in market rates  Currently, daily VaR data is produced using a 1 year look back using the Historical Simulation method, though in parallel, parametric and Monte Carlo testing is also conducted
  23. 23. 22 Appendix III: Risk management – Value at Risk (VaR) (cont’d)  Different calculation methods  Absolute or relative VaR will be applied to the Jupiter International Financials Fund according to benchmark volatility  The Jupiter Absolute Return Fund will be restricted to an absolute VaR method  If VaR approaches limit, Philip may:  Diversify the portfolio  Reduce the gross exposure  Hedge part of the portfolio  Reduce exposure to positions with high marginal VaR contribution
  24. 24. 23 Apendix IV: Jupiter Financial Opportunities FundRanked 2nd out of all unit trusts since launch  Performance 02.06.97 to 31.10.10 Rank / 695 Unit Trust % Growth 1 Marlborough - Special Situations TR in GB 883.07 2 Jupiter - Financial Opportunities TR in GB 786.21 3 Baring - Eastern Europe TR in GB 733.53 4 BlackRock - Gold & General TR in GB 702.06 5 BGF - World Mining TR in GB 659.34 6 Aberdeen - Emerging Markets TR in GB 574.61 FTSE All Share TR in GB 103.97Source: Financial Express, bid to bid, net income reinvested 02.06.97 to 31.10.10.
  25. 25. 24 Appendix V: Jupiter Financial Opportunities Fund  Performance since launch Jupiter - Financial Opportunities TR 786.21 FTSE ASX Financials TR 51.90 1000 Bull Market Bear Market Post Iraq Credit Crunch  Fin Opps 127.75%  Fin Opps 18.09%  Fin Opps 192.60% 800  FTSE Financials 22.30%  FTSE Financials -6.58%  FTSE Financials 116.68% 600 Outperformance 105.45% Outperformance 24.67% Outperformance 75.92% % Growth  Fin Opps 12.61% 400  FTSE Financials -38.65% Outperformance 51.26% 200 0 -200 Jun 97 Jun 98 Jun 99 Jun 00 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10Source: Financial Express, bid to bid, net income reinvested 02.06.97 to 31.10.10.
  26. 26. 25 Appendix VI: Jupiter Financial Opportunities Fund  Calendar year performance 2009 2008 2007 2006 2005 2004 2003 Jupiter Financial Opportunities 11.89 7.25 1.78 15.70 33.94 19.54 39.46 FTSE Financials 29.99 -47.90 -13.76 20.58 17.18 14.64 23.31 2002 2001 2000 1999 1998 02.06.97 to 31.12.97 Jupiter Financial Opportunities -7.74 0.95 42.42 34.65 41.64 12.02 FTSE Financials -22.80 -7.46 14.44 18.27 8.18 15.92Source: Financial Express, bid to bid, net income reinvested 02.06.97 to 31.12.09.
  27. 27. 26 DisclosureJupiter Unit Trust Managers Limited (‘JUTM’) and Jupiter Asset Management Limited (‘JAM’) are bothregistered in England and Wales (nos. 2009040 and 2036243). The registered office of both is 1 GrosvenorPlace, London SW1X 7JJ. JUTM and JAM are authorised and regulated by the Financial Services Authoritywhose 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 investors.However anyone attending the presentation or who has the opportunity to view the accompanying slidesshould bear in mind that the value of an investment in a unit trust and the income from it can go down aswell 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 theshorter term. Quoted yields are not guaranteed. Current tax levels and reliefs will depend on the nature ofthe holding and details are contained in the key features documents. Past performance should not be seenas a guide to future performance.This document contains information based on the FTSE World Index and the FTSE Financials Index.FTSE® is a trade mark jointly owned by the London Stock Exchange Plc and The Financial Times Limitedand is used by FTSE International Limited (‘FTSE’) under licence. The FTSE World and the FinancialsIndices are calculated by FTSE. FTSE does not sponsor, endorse or promote the product referred to in thisdocument and is not in any way connected to it and does not accept any liability in relation to its issue,operation and trading. All copyright and database rights in the index values and constituent list vest in FTSE.The Jupiter Absolute Return Fund and the Jupiter International Financials Fund can use derivatives tospeculate as to the direction a market index, currency or share will move and can cause periods of highvolatility. The funds may incur losses greater than their initial investment into derivative contracts (althoughunit holders will not incur any liabilities beyond their initial investment). The funds are able to gain marketexposure in excess of their net asset value which can increase or decrease the value of units to a greaterextent than would have occurred had no additional market exposure beyond the funds net asset been inplace. The funds values are unlikely to mirror increases and decreases in line with the respective marketsthey are invested in to. Further information is contained within the Key Features (incorporatingSimplified Prospectus).For your security we may record or randomly monitor all telephone calls. If you are unsure of the suitabilityof an investment please contact your financial advisor. Any data or views given should not be construed asinvestment advice. Every effort is made to ensure the accuracy of the information but no assurance orwarranties are given.3420_ABS RET_PG

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