Morningstar Downgrades Jupiter Special Situations Fund After Star Departure

Morningstar
has
downgraded
Jupiter
Asset
Management’s
flagship
£2.07
billion
UK
Special
Situations
fund
and
£1.5
billion
Income
Trust
following
news
of
the
departure
of
lead
portfolio
manager
Ben
Whitmore.

The
strategies
had

previously
been
placed
“under
review”
by
Morningstar’s
analysts. 
 

Highly-regarded
Whitmore,
who
took
the
helm
of
the
funds
in
2006,
is
set
to
leave
Jupiter
this
July
to
launch
his
own
value
equity
fund
house,
subject
to
regulatory
approvals
and
a
Jupiter-imposed
two-year
non-compete
clause. 

The
UK
Special
Situations
fund
will
be
taken
over
by
Alex
Savvides,
who
joins
from
JO
Hambro
Capital
Management,
and
the
Income
Trust
will
be
led
by
Adrian
Gosden
and
Chris
Morrison
who
join
from
the
embattled
Swiss
asset
manager
GAM.  

Morningstar
analyst
Daniel
Nilson
has
since
downgraded
the
strategies’
the
People
and
Process
Pillars
to
average
from
High
for
the
UK
Special
Situations
fund,
because
of
uncertainty
around
which
elements
of
Whitmore’s
process
will
now
be
conserved.  

“Our
understanding
is
Savvides
will
bring
across
his
existing
process
and
portfolio
construction
nuances
while
retaining
the
fund’s
value
heritage,”
Nilson
says.  

“However,
there
are
still
some
differences
that
will
need
to
be
flushed
out,
as
Whitmore’s
process
centres
on
value
metrics,
while
Savvides
places
more
focus
on
identifying
companies
undergoing
changes
not
yet
fully
recognised
by
the
market.”

Nilson
also
points
to
Savvides
allocating
slightly
further
down
the
market
cap
spectrum,
not
investing
heavily
in
offshore
holdings,
as
well
as
running
his
process
with
less
holdings
and
more
concentration
amongst
his
highest-conviction
ideas.  

Under
Whitmore
the
fund
has
been
lucrative
for
investors,
returning
263.36%
in
the
period
between
June
2008
to
February
2024,
versus
the
Morningstar
UK
All
Cap
TME
index,
which
achieved
159.10%
return
rate.  

Whitmore’s
departure
also
forced
Nilson
to
downgrade
the
Income
Trust
from
Above
Average
to
Average
on
both
the
People
and
Process
pillars.  

Gosden
and
Morrison,
who
currently
manage
the
GAM
UK
equity
Income
Fund,
have
some
key
portfolio
construction
differences
with
Whitmore.  

“The
process
followed
on
the
GAM
UK
Equity
Income
strategy
allocates
further
down
the
market-cap
spectrum,
has
a
minimal
allocation
to
offshore
holdings,
and
has
slightly
more
holdings,”
Nilson
says.

He
is
also
uncertain
about
how
the
portfolio
construction
differences
will
be
incorporated
into
the
trust.
However, he
cites
that
one
commonality
is
the
value-focused
process,
although
the
GAM
managers
will
not
be
as
deep-value
as
Whitmore
was.  

“It
is
our
understanding
that
Adrian
Gosden
and
Chris
Morrison
will
retain
the
process
they
have
honed
on
the
GAM
UK
Equity
Income
fund,”
Nilson
says.  

“This
process
is
founded
on
how
much
spare
cash
each
business
generates
and
its
ability
to
pay
dividends
with
this
cash.
Idea
generation
starts
with
a
basic
filter
of
the
UK
stock
market
to
find
companies
with
good
free
cash
flow
metrics.”

From
June
2008
to
the
present
day
the
Jupiter
Income
Trust
returned
120.64%,
although
it
underperformed
the
Morningstar
UK
All
Cap
TME
Index,
which
saw
a
return
rate
of
159.10%.  

Today,
shares
in
parent
company
Jupiter
Fund
Management
(JUP)
are
down
around
35%
over
one
year
as
the
investment
firm
struggles
to
recover
from
staff
departures
and
outflows.  

In
January,
Jupiter
chief
executive
Matthew
Beesley
said
he
wished
Whitmore
well. 

“Having
worked
at
Jupiter
since
2006,
Ben
informed
me
of
his
ambition
to
set
up
a
new
independent
value
equities
boutique,
which
has
been
a
long-term
personal
aspiration
for
him,”
he
said.

“I
would
like
to
thank
him
sincerely
for
his
contribution
to
the
company
and,
after
he
leaves
Jupiter,
wish
him
well
for
the
future.”