View the article online at http://citywire.co.uk/money/article/a611410
Jupiter Primadona: a global growth trust that packs a punch
James Carthew gives his verdict on Jupiter Primadona – a small investment trust with impressive long-term performance.
Jupiter Primadona is not one of the biggest funds – its market cap is just £42 million – but its distinctive investment approach makes it one of the more exciting global growth trusts.
So far in 2012, it leads the pack in net asset value (NAV) performance, up by 14% against an average for its sector of 7.5%. Its long-term performance is not bad either, at fourth of 20 funds over 10 years.
It is also the highest-yielding fund of its group with a historic yield of 4%. I think it is a shame, therefore, that it is not better loved by investors.
It is one of those ‘global’ funds that has a distinct bias to the UK. This reflects the fund’s benchmark, which is 75% FTSE All-share and 25% FTSE World ex-UK. The managers try to keep the asset allocation flexible, however, and there are no formal limits on bets relative to the benchmark.
The fund is managed by a two-man team: Richard Curling, who also manages the Jupiter UK Smaller Companies fund and the Jupiter Fund of Investment Trusts , and Derek Pound, who also runs the Jupiter Global Energy fund and the UK part of the group’s Global Managed fund.
The annual charge is 0.8% on net assets and there is a performance fee of 15% of the excess return over the benchmark. Ongoing expenses are towards the higher end of the group as a result but are not excessive.
They use a modest amount of gearing, in the form of a flexible bank loan, and at the end of June this was about 15%. The board has set a limit to borrowing of 20%, but lets the investment manager make the day-to-day gearing decisions.
The UK portfolio is divided into four parts. Large caps such as Shell (RDSb.L), BP (BP.L), HSBC (HSBA.L), Vodafone PLC (VOD.L) and GlaxoSmithKline (GSK.L) form the core. Smaller high-quality growth stocks help offset the sluggish bigger companies.
They may also have exposure to value plays, but only when this makes sense cyclically or when they perceive them to be materially undervalued. The last group of investments are special situations, a bit of a catch all for other stocks they find interesting from a value perspective.
They use funds to diversify the portfolio and to provide overseas exposure, accounting for about a third of the fund. The biggest holding is Findlay Park American , a holding common to many fund of funds, thanks to its superior long-term track record.
The choice of a Jupiter fund is amply justified by Alex Darwall’s track record with this fund. Despite all the calamitous headlines about Europe, Jupiter European is one of the best-performing funds year to date in NAV terms and has seen its discount narrow.
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More about this:
Look up the funds
- Jupiter UK Smaller Companies Acc
- Jupiter Fund of Investment Trusts
- Jupiter Global Energy Ret
- Findlay Park American GBP
- AXA Framlington American Growth R Acc
- First State Asia Pacific Leaders A GBP Acc
- Jupiter JGF European Opportunities L GBP
Look up the shares
- Royal Dutch Shell PLC (RDSb.L)
- BP PLC (BP.L)
- HSBC Holdings PLC (HSBA.L)
- Vodafone Group PLC (VOD.L)
- GlaxoSmithKline PLC (GSK.L)
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