Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Jupiter ‘happy’ at bumper £5 million FSCS refund

1 comment
Jupiter ‘happy’ at bumper £5 million FSCS refund

Jupiter Fund Management is 'happy' with the £5 million rebate it has received from the Financial Services Compensation Scheme (FSCS).  

Jupiter had originally paid £5.2 million into the scheme in 2010 to compensate investors who had lost out from the failure of a number of financial institutions, including Keydata.

The FSCS subsequently opted to refund fund managers ahead of advisers on any recoveries it made from Keydata.

‘This is a better outcome than we hoped for,’ Jupiter chief financial officer Philip Johnson told Wealth Manager.  ‘We have been working with the FSCS hard on what rate we should pay and we are very happy with this outcome.’

Dividend hike

The news was revealed in Jupiter’s full year numbers in which it increased its dividend by 13% to 8.8p.

The FSCS rebate, along with a reduction in financial expenses, helped profitability jump from £70.3 million to £73.6 million.

Meanwhile, assets under management rose from £22.8 billion to £26.3 billion and inflows edged up from £0.7 million to £ 1 billion.

However, total net revenue fell from £248.5 million to £244.5 million due to declines in performance fees and initial charges. The UK accounted for the bulk of this revenue at £225 million, while continental Europe dipped from £18.3 million to £14.7 million.

In the run up the results, brokers had expressed concern on the impact of the retail distribution review (RDR) on the firm given its high exposure to the UK.

Bank of America Merrill Lynch expressed this concern in a note published at the end of January. ‘Given the uncertainty around RDR we are forecasting a slowdown in the group’s inflows,’ the note said.

‘We believe Jupiter’s best in class reputation means that it will eventually thrive in a RDR compliant world. However, we are more cautious in the short run given what will most likely be a choppy transition period of the IFA community.’  

Jupiter chief executive Edward Bonham Carter (pictured) said he is not too worried about this, while pointing out the group continues to look to diversify its business.

‘We have been diversifying our business and we also believe in focus, so we are not too concerned about our exposure to the UK market, Bonham Carter told Wealth Manager. 'We believe it’s better to focus on excellence rather than be overly diversified.’

Johnson added: ‘The UK market has always had a good equity and long term savings culture so it’s a good market to be highly exposed to.'     

Market reaction

Commenting on the results Bonham Carter told the market: ‘Our strong investment performance, brand and distribution capabilities have helped Jupiter steer a steady course through another challenging year for financial markets.

'This, combined with our increasingly robust balance sheet and confidence in our growth prospects, has led the board to recommend increasing our total dividend by 13% to 8.8p.’

Bonham Carter is cautiously optimistic on the future: 'It is possible the current rally in financial markets will be sustained, assuming the ECB continues to support weaker economies and the US recovery is not derailed.

'However, in reality, not much has changed from a year ago and markets are still facing several long term challenges. While savers across Europe remain squeezed in the short term due to low wage growth and increases in the cost of living, the structural growth drivers for the savings market remain intact.'

The market welcomed the figures, with shares rising 2.34%, or 7.7p to 337.2p by 10.45am to sit just shy of their 12-month high of 337.2p.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Your Business: Cover Star Club

Profile: 'new normal' now is as dangerous as when it was applied to tech

Profile: 'new normal' now is as dangerous as when it was applied to tech

7IM's CIO Chris Darbyshire says he has been re-energised by his new role, but has little time for 'new normal' doom-mongers

Wealth Manager on Twitter