The departure of Charlie Thomas from Jupiter Asset Management has posed questions for investors in the £681.2m Jupiter Ecology fund – one of the longest-running such strategies in the industry –which he has overseen since 2003.
The asset manager announced earlier this month that Thomas – its head of strategy, environment and sustainability at Jupiter – would be leaving after 20 years at the fund house.
Among his portfolio management responsibilities, Thomas – who is due to take up the role of chief investment officer at EdenTree Investment Management – also oversaw the JGF-Jupiter Global Ecology Growth, Jupiter Green Investment Trust, Jupiter Responsible Income and the JGF-Jupiter Global Ecology Diversified.
Over the past 17 years, which covers his time on the Jupiter Ecology fund, Thomas has outperformed his managerial peer group, making 317.22 per cent versus 230.20 per cent.
Performance of Charlie Thomas vs managerial peers over 17yrs
Source: FE Analytics
The Jupiter Ecology fund is set to be taken over by Jon Wallace – along with Jupiter Green Investment Trust, Jupiter Responsible Income and the equity segment of Jupiter Global Ecology Diversified – who has worked alongside Thomas for more than 10 years.
The fund invests in companies which provide products and services to address global sustainability challenges, focusing on three major areas: infrastructure, resource efficiency and demographics.
With the departure of such a longstanding manager on one of the industry’s longest-running funds of its type, Trustnet asked several experts whether investors should, buy, hold or sell Jupiter Ecology.
One of the positives of this change is how closely the new manager has worked on the fund with Thomas, according to Willis Owen’s head of personal investing Adrian Lowcock.
He said: “A fund manager change is a significant event in any fund but more so when the manager who has run the fund has become synonymous with the investment philosophy and investment process as Charlie had done in the Jupiter ecology fund.
“The transfer of management in this instance should be fairly seamless as incoming manager John Wallace has worked with Thomas for over 10 years and is therefore well versed in the process and philosophy.”
That isn’t to say that there won’t be any changes to the fund’s process.
Lowcock added that while he doesn’t expect the fund’s policy to change significantly under Wallace, “there may be tweaks and there is always the unknown when there is a change in the team”.
“As such, we would suggest a ‘hold’ view on this fund to watch how things pan out before investing further, but existing investors have little to be concerned about,” he added.
Darius McDermott, managing director of Chelsea Financial Services, said he wasn’t expecting too intense a shift between the outgoing and incoming manager of the Jupiter Ecology fund.
He said: “While Thomas’s departure is clearly a big loss to the asset manager, but there is some comfort for existing investors in the fact that Jupiter is one of the most experienced players in the environmental and sustainable space.”
For existing investors in the fund, McDermott said Wallace’s new management might spark an increase in the fund’s performance.
While the fund has made a top-quartile performance over the past year, over three, five and 10 years it has made second or third quartile returns.
Nevertheless, during his tenure on the the Jupiter Ecology fund, Thomas has made a total return of 448 per cent, outperforming the IA Global sector (341.96 per cent).
Performance of Jupiter Ecology fund under Thomas
Source: FE Analytics
On whether investors should sell out of Jupiter Ecology, McDermott said they may want to wait and see how Jupiter’s additional resources to the environmental solutions team pan out over time, as the asset manager appears “extremely committed to this [sustainable] space”.
“For new investors, I would say there are plenty of alternatives to consider – all of which have demonstrated exceptional performance over a long period of time,” he added.
Ryan Hughes, head of active portfolios at AJ Bell, noted that while the fund is one of the oldest in what is now a very popular area of investment, it hasn’t been able to capture this interest as well as other mandates.
He said: “The Jupiter Ecology fund is an interesting one in that is has one of the longer track records in what has become a very hot area but hasn’t really captured the imagination in the way that the likes of Liontrust have with their sustainable range.
“Long-term performance has been acceptable but has lagged some others but it’s important to remember that comparing different ESG/responsible funds is dangerous as they may be working to different criteria and constraints.
Hughes added: “Thomas had a long tenure on the fund and his departure leads to a reorganisation of the ESG capability at Jupiter which may cause some concern.”
According to Hughes, current investors considering selling the fund should carefully consider whether any replacement will meet their sustainability objectives.
“The decision as to what investors should do now is not clear cut given the continuity of approach and for that it’s probably a ‘hold’,” he concluded. “However, any investor thinking of selling should check the criteria of any replacement fund to ensure their approach to ESG matches the investor’s own beliefs.”