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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: a global growth trust that packs a punch

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.

Management strategy

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.

UK portfolio

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.

This is complemented by a holding in AXA Framlington American Growth . The second biggest holding is First State’s Asia Pacific Leaders fund and the third largest is Jupiter European Opportunities .

Best performing

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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1 comment so far. Why not have your say?

john_r

Aug 18, 2012 at 00:26

Could this be the same Jupiter Primadonna trust that I luckily sold in May this year before it plunged. Despite its positive performance more recently while it claws its way back I still find a TER of 1.5% (described in the article as not excessive) a little over the top for a fund now ranking 152nd out of 390 Global funds - 1 year performance taken from Trustnet . I just can't get excited about buying in again especially when its largest holdings are actually other investment company's funds.

To call it a global fund I also find a little strange since it has a geographical spread of only 15% outside of the UK. So I then compared it with a UK fund and chose an old favourite - Edinburgh IT for comparison (this is a defensive UK Growth and Income investment trust with a TER of 0.7%) and it seems Edinburgh has a much better 1 year performance too.

Oh dear - Primadona has shined in the past and no doubt it will again but I am left wondering if this article is a little early and more like wishful thinking. I need some evidence that Primadonna is worth its premium charging structure before buying in again.

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  • Jupiter UK Smaller Companies Acc
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  • Jupiter Fund of Investment Trusts
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  • Jupiter Global Energy Ret
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  • Findlay Park American GBP
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  • AXA Framlington American Growth R Acc
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  • First State Asia Pacific Leaders A GBP Acc
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  • Jupiter JGF European Opportunities L GBP
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Look up the shares

  • Royal Dutch Shell PLC (RDSb.L)
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  • BP PLC (BP.L)
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  • HSBC Holdings PLC (HSBA.L)
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  • Vodafone Group PLC (VOD.L)
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  • GlaxoSmithKline PLC (GSK.L)
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Look up the investment trusts

  • Jupiter Primadona Growth (Ordinary Share)
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Look up the fund managers

  • Richard Curling
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  • Derek Pound
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