Every European fund run by Jupiter’s Alexander Darwall
and Cedric de Fonclare
has been a top-quartile performer in its sector since the pair took charge, according to the latest FE Trustnet
Darwall runs the open-ended Jupiter European
fund and the closed-ended Jupiter European Opportunities trust, while de Fonclare manages the Jupiter European Special Situations and the Jupiter European Income funds.
Jupiter European Opportunities has the best returns over the past three, five and 10 years.
Over the longer period the £265.7m trust has returned almost double that of the open-ended Jupiter European fund, making 465.05 per cent while the fund has risen 238.57 per cent.
The next highest returns in the IT Europe sector over 10 years were the 253.77 per cent delivered by the Henderson Euro Trust
. This investment company is also second to Darwall’s over five years.
The Jupiter European fund has more than £1.67bn in assets under management and its outperformance in bull and bear markets since Darwall took the helm in 2000 led FE to award it five crowns and a place in its FE Research Select 100.
Performance of fund vs sector and benchmark over 10-yr
Source: FE Analytics
Robert Love, head of research at Asset Intelligence, said: "Jupiter’s flagship Darwall fund has been a favourite of ours for a long time. Even within the constraints of being a large fund it has almost always been top quartile."
De Fonclare’s Jupiter European Special Situations
fund also has five crowns and appears in the FE Research Select 100.
The manager took over the portfolio in 2005 and it has been a top-quartile performer over the past three and five years.
Performance of fund vs sector and benchmark since July 2005
Source: FE Analytics
In July 2011 the manager also took control of the £24m Jupiter European Income fund, which is currently yielding 5 per cent according to FE Analytics
Talking exclusively to FE Trustnet
, de Fonclare (pictured)
said the team’s focus on quality has been the biggest contributor to outperformance across the range of funds.
"We’re looking for best-in-class companies with strong balance sheets and we don’t mind having to pay up a little extra," he said.
"We believe the stronger will get stronger, while leveraged companies will struggle."
"The deleveraging effect will take a very long time and we think these are the companies that will do best. It took us 30 years to get to this level of debt."
"The process will impact global growth and there is going to be a high level of political risk in Europe in particular."
De Fonclare's two biggest regional positions are Germany and Switzerland, which have a weighting of 26 and 20 per cent respectively.
Although he acknowledges his portfolio has a higher price-to-earnings (P/E) ratio than his peer group, he thinks quality markets are still available at a fair price.
"I saw some research from UBS recently which showed the forward P/E ratio for 2013 is the same in Spain as it is in Germany," he explained.
De Fonclare’s European Special Situations and European Income portfolios have all underperformed during the recent surge in markets, but he says he has no intention of changing his style.
"There has been a degree of relief in southern Europe recently, but we’re treading very carefully when it comes to adding risk in that area," he continued.
"Equity markets are at around a four-month high. Now we’re in reporting season and I think it’s going to be more challenging for companies."
Since de Fonclare spoke to FE Trustnet
last week, the DJ Euro Stoxx 50 has fallen 2.12 per cent.
"[The ECB] has solved the short-term issues [in the eurozone], and investors are starting to look away from Europe for the first time in a while and to other leading indicators, such as the performance of emerging markets," he added.
"Foreign investment is coming back in to Europe which is a very good thing, but we’re keeping our portfolio away from political risk."
"The banks are up 27 per cent or so in the last three months and insurance is in second with 19 per cent. However, we have avoided sectors that are exposed to regulators, including the banks, which is partly why performance has come off a bit recently."
"We are avoiding banks in the peripherals altogether," he added.
De Fonclare’s Jupiter Special Situations has 13.61 per cent in financials – around 7 percentage points less than the average Europe ex UK portfolio. The manager says he has exposure to a number of investment banks, including UBS, which has a 2.66 per cent weighting.
The manager also runs the Luxembourg-domiciled Jupiter European Opportunities fund, which can invest in the UK. Asked which he would choose to invest in if he had the choice between this portfolio and Jupiter European Income and Special Situations, he said:
"I’m positive on the UK at the moment, so I’d probably go for European Opportunities, given that I have more choice."
"The UK is growing quite nicely and the market is very international, which gives you more diversification."
Darwall’s Jupiter European and de Fonclare’s Jupiter European Income and Special Situations funds are all available with an initial investment of £500.
The total expense ratios on the funds are 1.79 per cent, 1.8 per cent and 1.81 per cent respectively, according to data from FE Analytics