Jupiter CEO Edward Bonham Carter has invited the rest of the fund management industry to 'come out of the closet' by showing they are active stockpickers and able to achieve genuine outperformance, as fees become even more of a focus post-RDR.
'There is a plea to the industry dare I say to come out of the closet and be active stockpickers. As you know, we at Jupiter came out of the closet a long time ago and we need to make sure we stay out of the closet,' he told an audience at the company's investment dinner.
Bonham Carter (pictured) said the key challenge for the business and the industry as a whole is to achieve performance to justify fees for active management, but he is confident that Jupiter can continue to do this - although he acknowledges that not all of Jupiter's funds have performed, noting 'we are not perfect'.
'Past performance is not a guide to future I am required to say. I think it is some guide to the future and John [Chatfeild-Roberts] in our fund of funds team has demonstrated that by identifying excellent fund managers,' he added.
Wealth management opportunity
Looking ahead, he is aiming to grow the firm's private client business, which runs around £1.9 billion in assets, and hopes the hire of new head of private clients Andrew Clark from Schroder Private Banking can power this.
'We are one of the few unit trust businesses that has a reasonable brand name and we have got a good private client arm as well. That is an interesting strategic option for our clients and shareholders and I think you will be hearing much more about that over the next three to five years,' he said.
Comparing Jupiter's evolution to different geological eras from its establishment by John Duffield, through to the management buy-out in 2007 and now post-IPO, he says the key focus for the firm is not just to grow assets but also delivery and performance.
Returning to his analogy that we are now in a 'hippo' market, or rather markets which are between a bull and bear phase, trading in a broad range from where they were in 2000, with occasional bouts of volatility, he asked the audience 'where is the beef in the bull market?'.
He believes the current run in equities is not comparable to previous bull markets. He said although equity markets are likely to be buoyed from a shift of assets from cash and bonds into equities, while a pick-up in M&A is not out of the question, he points to the unprecedented amount of stimulus that is underpinning the global economy.
'They are conducting a giant experiment here...we are attempting to navigate in quite uncertain conditions and you know your sextant and compass have been recalibrated. The new normal is something you have no sense of.
'I think that is partly the world we are in today. It is very hard to work out objective benchmarks and values if the bond market and the price of assets has been altered and manipulated. And that makes it more challenging. It means you retreat and stick to what you are good at in the first place, which is fundamental analysis.'
He added: 'The challenge of course for an equity house is the sustainable level of profits in companies and ventures, what is it going to be in 10 years time and what are the competitive barriers to entry that you can believe in and therefore price on behalf of your investors. That is the challenge my colleagues face, I just need to make sure they behave.'
Coming back to his initial question, he concluded: 'I realise the FSA has looked at the issue of where the beef is in the bull market. I will let you work out which FSA it is. We have worked out actually it is a horse disguised as a bull at the moment that is causing all the trouble.'