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Leading fund manager Gibbs slashes cash and sells out of gold

Jupiter Financial Opportunities co-managers Philip Gibbs and Guy de Blonay have slashed the fund's cash position by more than two thirds over the past month.  Gibbs has also sold out of the physical gold ETF he held in the Jupiter Absolute Return fund.

Leading fund manager Gibbs slashes cash and sells out of gold

Jupiter Financial Opportunities co-managers Philip Gibbs and Guy de Blonay have slashed the fund's cash position by more than two thirds over the past month.

At the end of June, the Citywire Selection listed fund had just over 41% of its assets held in cash, but by July the figure had fallen to just 13.65%. The pair have used the cash to increase exposure to all geographic regions, including Europe and the UK, except for North America.

US caution

The duo had signalled their cautious stance on North America last month when exposure was halved from around 26% to 13%. At the same time, a core 5.8% fund position in HSBC has been almost halved to just under 3%.

At the end of July, UK exposure had been increased to over 21% from 16% a month previously, while Europe saw the biggest respective increase, up from 6.8% to 17.6%.

The pair have also added to their position in Lloyds, which became a top 10 holding, contributing 4.26% of the fund at the end of July. Weightings in Standard Chartered  and long term favourite DnB NOR were both increased by almost 3% and 2.5% to 8.07% and 8.46% respectively.

Despite Citywire A-rated Gibbs' current concerns over North America, Citigroup remained the £1 billion fund's largest holding at the end of July.

Gold sold down

In Gibbs' £600 million Jupiter Absolute Return  fund launched last December, he has sold out of his position in physical gold. The ETF Securities physical gold ETF had been Gibbs' second largest long position at the end of June. A position in 2021- dated Australian government  bonds yielding 5.75% had been added to the long portfolio over the same period.

In terms of country weightings, Gibbs has introduced short positions in the US and the UK of -1.05% and -1.72% respectively while he has been increasing his long exposure to Australia.

Japan remains the biggest short within the fund, with a position worth -25.0% at the end of July, compared to -21.38% a month earlier.

28 comments so far. Why not have your say?

Greg Bone

Aug 26, 2010 at 08:42

Interpreting the August factsheet for JAR, the Japan short of -25.9% is in the JGB market. Artemis' Strategic Assets Fund also has a large JGB short.

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Alan john

Aug 26, 2010 at 09:33

Could anybody,please, explain what JAR and JGB mean?Thank you in anticipation

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nigel sherring

Aug 26, 2010 at 09:38

AJ. Jupiter Absolute Return,and Japanese Govt.Bond ,I think

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Sean Charlesworth

Aug 26, 2010 at 09:58

JAR is referring to the Jupiter Absolute return fund Gibbs runs and JGB is referring to Japanese Government Bonds

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Greg Bone

Aug 26, 2010 at 09:59

Indeed JAR = Jupiter Absulte Return and JGBs = Japanese Govt Bonds. Apologies, also for dropping a decimal point; the short is -25.09% according to the Jupiter factsheet.

It would be helpful if Citywire was more precise in detailing large positions rather than describe simply "country weightings"; big difference between -25.09% short bonds and equities (of course) and I am only surmising that the short is in bonds from the equally opaque Jupiter factsheet. I was initially alarmed in reading the Citywire article since, if the short had been in equities, that would put be a major punt and would put Gibbs at serious odds with Ruffer, who have a significant bullish exposure to Japanese stocks.

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Aug 26, 2010 at 10:01

None of these clever buggers know what they're doing, they would have similar results using a roulette wheel - its all pure guesswork cloaked in what they hope is the impressive mystique of smart arse city finance-babblespeak. Spivs in suits who seem to be able to fool most of the people most of the time. Notice how every time something goes wrong with their funds they have a plausible reason for why its gone against them - most of these people would make top double glazing sales thugs.

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Alan, Bristol

Aug 26, 2010 at 10:11

Rustie - how true, how very true!

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Aug 26, 2010 at 10:14

In the medium to long term Gibbs' strategy appears sound. However he knows he is not going to be able to cream off any returns in the form of dividends and interest if he sticks with gold and cash. His commission and management fees have to come from somewhere. Investors in his funds would be none to pleased if they saw their capital being gradually nibbled away.

Investing in funds is always about the medium to long term. There is very rarely a short term profit and a quick exit.

Personally, I think the uptick in the gold price will continue in the short term. My preferred vehicle is direct investment in mining equities.

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Aug 26, 2010 at 10:19

Sold out of gold, interesting but maybe wrong.

One of the reasons for avoiding investing in the States is probably the dollar.

If the dollar along with the American economy goes into even sharper decline gold will go up.

If Senator Paul manages to get an audit of the US physical gold reserves and it turns out that the Fed is holding little or nothing then what happens is only known to God.

The first reaction will be that all economic bets are off vis a vis the States with the dollar falling like a lead Zeppelin and with gold heading for the stratosphere, scary stuff.

The consequence of such an upheaval is that China will suddenly and unexpectedly have won the economic shoot out with the States that is now in progress.

The renminbi will become the world's reserve currency and we will all be kicking ourselves for not having bothered to learn Chinese.

As for what will happen here in such a circumstance, I shudder to think, particularly if the Chinese back their currency with gold which taking into account of the fact that they are beginning to buy up gold producers whilst at the same time encouraging their citizens to buy physical, it is becoming blindingly obvious that this is their plan.

Time to buy a town house in Shanghai?

It is for these sorts of reasons that I think that Mr. Gibbs may have got it wrong, at least in the medium term.

But what would I know, perhaps old age has addled my brain!

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Greg Bone

Aug 26, 2010 at 10:23

Interesting interview with Robin Griffiths, much-respected technical analyst at Cazenove, this morning on Bloomberg. Believes US will test March '09 lows in 2nd half 2011.

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Angry pensioner

Aug 26, 2010 at 11:19

I am with Rustie, how right you are !

I prefer to think of them a horse racing experts, before the Race they will tell you which horse will win,put your money on that my son !

After the race,these same experts will tell you Exactly why it didnt !

Either way they have had your money.

They are nothing more than punters,if it comes good they are off to spend the millions in bonus they have awarded themselves.

When it falls flat on its face, there are all sorts of excuses they can come up with.

Your money has gone in the wind and they are off to some new job with a golden handshake, a golden hello and an even bigger basic salary, plus of course even bigger bonus payments if they get it right second time around.

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Always Wrong

Aug 26, 2010 at 11:25

Stormdog With US desperately trying to pay back debts and it seems buying own treasury bonds, gold seems a long term safe zone. Commodity inflation a possibility too. I M O maybe BP a good long term buy 3-3.50p too for oil. Gold backed renminbi, now that's one for the future!

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S Singh

Aug 26, 2010 at 11:36

They probably sold out of gold long positions to cover margin for losses in european / equity long position. The fact that their cash position currently is so low is too risky in this environment. They could get caught with thier pants down!

UK / European equities will go much lower. Their best bet seems to be the Citi bank holding, which is an asset that can only really rise from here having already been beaten to smitherines. Holding Lloyds is also akin to holding City.

Shorting JGB's is a mistake unless its a hedge against a short position in Japanese equities. That approx 25% short to the JAP market must be a composition of part short JGB's to hedge against a short of JAP equities. In my opinion, this is not a very sophisticated form of activity, its just too easy to do.

This article is misleading as most readers are probably not directly involved in the markets and as a result take what they read for face value.

The article leads readers to assume that this chaps fund is very far from home ; ie far from some measure of market neutrality. This I seriously doubt, but may well be possible as some of these fund managers are nuts when it comes to taking risk with other peoples money!!

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Richard Gabb

Aug 26, 2010 at 11:44

Well Rustie and Angry Pensioner I've been saying for some time that the 'King' was losing his clothes and I guess he's almost naked now ! I even wonder if there is some case for " mis-selling" JAR, since I went it it has just gone down irrespective of any comparative indice. To date he's 'lost' me 3.33% whilst the FTSE has risen by 0.35%. I call it the JAL fund (sub Return for Loss). When I rang Jupiter to complain, even speaking to someone above the telephone minions, I got the usual fob offs. Who knows, perhaps he is right but thank God for their European Fund, a neglected success in that sector.

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Jeremy Bosk

Aug 26, 2010 at 11:45

To be fair the fund has considerably outperformed the benchmark every year since 2005. I hate the 5.25% initial and the 1.5% annual charge plus 0.25% other charges. But that is why Hargreaves Lansdowne and other fund supermarkets make so much money by rebating the commission and charges. The fund managers and financial service conglomerates like HL also for the most part pay dividends which this fund does not.

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Greg Bone

Aug 26, 2010 at 11:46

Jupiter Abs Return is an absolute return fund as the name suggests but it is NOT a market neutral fund. It is a global multi-asset fund, like Gibbs' offshore hedge fund Hyde Park. It takes directional positions (long or short) in whatever the fund manager thinks will pay off over time.

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joe stalin

Aug 26, 2010 at 11:48

Robin Griffiths is just another Casandra talking his own book. He has ben talking armageddon for the last 12 months and made any of his followers much poorer. He is just a wallet -surgeon hiding behind his charts. bah

Phillip Gibbs however is much brighter I know him of old and worked with him- he's worked in the biz a long time and knows his onions

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Peter J

Aug 26, 2010 at 12:41

I sold some technology shares and brought Jupiter Financial Opportunities in late 1999. Since then that investment has gained 231% (i.e. 3.3 X what I paid for it). That is not bad performance over this last wretched decade.

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Aug 26, 2010 at 13:06

4.99% return over the past 12 months does not indicate to me that there is any financial wizardry at work in Jupiter Financial Opportunities. Makes me even more convinced that 90% of investment managers are just throwing dice!

As for Absolute Returns, they seem to be an absolute waste of time.

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barry slater

Aug 26, 2010 at 16:06

I agree they know nothing while... still taking thier fees off of clients whatever happens the clients hard won investments.

Now show me an "expert" who will only make their fees based on what they make you ...and I might get interested.

How about this...forget fixed fees......they ( the experts) can pocket anything they make over a 6% return over a one year term.. as long as they make up any short fall on a theoretical safe 2,5 % 1 year bond if their their investments go wrong.

How many takers will I get out of all the experts in the uk ?

Im not holding my breath :)

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The Astrologer

Aug 26, 2010 at 18:42

Mistake to get out of gold, but they weren't really in gold with ETF's........ too much risk there in comparison with having someone take delivery on your behalf (or holding it yourself!)

The general sentiments above re these people is correct. Most companies also run several funds and then advertise the best results with the benefit of hindsight. Do your own research and invest yourself (or stay in cash)....... too many of these managers walk away with a fee regardless of actual results (and who knows what commissions or deals go on in the background?)

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Victor Meldrew

Aug 26, 2010 at 22:43

Rustie - an impressive alternative to the Efficient Market Hypothesis. Instead of 'everyone knows everying' and 'everyone is rational', it's 'nobody has a clue' and 'they're just after your cash'. The beauty of it is that the tortuous arguments to show that Buffet, Soros, and Trustnet's entire list of Alpha Managers are not living disproof of the Efficient Market Hypothesis, also support your own gem. Wonderful!

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Anonymous 1 needed this 'off the record'

Aug 27, 2010 at 07:12

To quote Clint Eastwood, it has a certain understated stupidity.

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Angry pensioner

Aug 27, 2010 at 07:28

Peter J

Life is made up of winners and "losers".

For every winner there has to be several losers,how else would these people make the fabulous salaries and bonus payments ?

You are just the lucky drunk,outside the bookies,congratulating yourself that you fancied the name of the horse and put a few quid on it.

The investment came good for you but millions of others have lost elsewhere to provide the returns you crow about. Get real !

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Anonymous 1 needed this 'off the record'

Aug 27, 2010 at 08:25

That is a pathetic comment Angry Pensioner. Believe it or not, there are quite a lot of people who are smart enough and take sufficient trouble to identify good funds and good fund managers that suit their objectives and who appreciate that investment requires a long-term horizon.

They also realise that no one is infallible and so, if they are smart, they don't put all their eggs in one basket. You can rubbish any fund manager if you want to select a time period that's short enough to suit your argument.

There is no need to rubbish an investor who has evidently been smarter than many others. Believe it or not it is possible to make good returns from a portfolio without being lucky.

It is not compulsory to invest in funds or anything for that matter. If you don't want to, fine.

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Aug 27, 2010 at 10:11

I am so heartened by all your postings, particularly the ones that point out that many fund managers despite their charts and all the rest of the junk are no better at stock picking than anyone else who keeps themselves broadly informed and awake to micro trends before these become macro trends.

So many people write this country off, but with guys like you around I reckon that we have a very bright future.

Damn, you make me proud to be British!

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Angry pensioner

Aug 27, 2010 at 18:28

Anonymous 1 who ever you are , needed this off the record.

Who is pathetic ?

I have not rubbished anyone, I simply point out that as my mate Rustie commented and quite a few others. these fund managers are simply gamblers who play with someone elses money.

They are in a win win situation

As for Peter J, if he is happy ,so far so good, but there are an awful lot of the rest of us who are quite fed up with the money management guru,s

As I have already said ,and this is actually very true, life is made up of winners and losers. the problem is there are more losers than winners as you have proved.

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Aug 27, 2010 at 23:24

currency while countries like uk and usa are printing currency, it makes sense to stay with gold, its a finite product and the skies the limit on price. who trusts an IOU these days,they are not worth the paper their printed on.

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