Alexander Darwall will step down as manager of the £5.3bn Jupiter European fund and the £2.4bn Jupiter European Growth Sicav by the end of 2019, Jupiter Asset Management announced today, and will be replaced by Mark Nichols, the current co-manager of the £1.5bn Threadneedle European Select fund.
Darwall, an FE Alpha Manager, will instead focus on the Jupiter European Opportunities Trust and his longstanding segregated institutional mandates.
Jupiter European has made 467.22 per cent since Darwall took charge in January 2001 compared with gains of 154.64 per cent from its FTSE World Europe ex UK benchmark and 137.27 per cent from its IA Europe ex UK sector.
Performance of fund vs sector and index under manager tenure
Source: FE Analytics
It has maintained this outstanding record over shorter periods of time, too, and is the second-best performer in its IA Europe ex UK sector over the past five and 10 years
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As a result, the fund is highly regarded in the industry and is recommended by the likes of Barclays, Square Mile Investment Consulting & Research and FE Invest, which awarded it four FE Crowns.
When a star manager leaves a fund, especially one who has been there as long as Darwall (pictured), the next question is inevitably: should investors sell out? The answer to this question usually depends on who is lined up to replace them.
“When Darwall approached us with his desire to focus on the Jupiter European Opportunities Trust and the segregated institutional mandates, our priority was to ensure continuity of process and a smooth transition for clients in this important franchise,” said Stephen Pearson, chief investment officer at Jupiter.
“In Nichols we have identified a bottom-up stock-picking investor with experience across the market capitalisation range in Europe and a conviction-based approach to portfolio construction. We are confident that he will fit the culture of active management at Jupiter and sustain the strong record of returns delivered over a long period by our European Growth team.”
Nichols has 18 years’ experience in European equities, having started his career with Invesco in 2001 before becoming the lead manager of the European Growth & Income franchise at F&C (now BMO) and joining Threadneedle European Select in 2016.
Data from FE Analytics shows he has made 121.73 per cent since he began managing money in October 2011, compared with gains of 110.26 per cent from his peer group composite.
Performance of manager vs peer group composite over career
Source: FE Analytics
Darius McDermott, managing director of FundCalibre, said that while this is obviously a big change for Jupiter, and finding someone to step into Darwall’s shoes would not have been an easy task, Nichols is probably the best person for the job.
“Darwall has successfully run the onshore European fund since 2001 and the offshore fund since 2007 and investors have been very loyal to him and his distinct style of management,” said McDermott.
“Nichols has co-managed Threadneedle European Select with David Dudding since 2016 (another Elite Rated fund) and we have been very impressed with him.
“He has a very similar investment style and philosophy in that he looks for quality-growth companies. However, while both funds have a similar number of holdings, the Jupiter franchise is a lot larger and the onshore fund is a lot more concentrated: the top-10 holdings account for some 61 per cent of assets while the top-10 of the Threadneedle fund account for 45 per cent.
“Jupiter European fund will lose its Elite Rating, but it will move to our Elite Radar. We like Nichols, but will want to see how he settles in post the move and if the fund retains its concentrated mandate going forward.
“As Darwall will continue to run the Jupiter European Opportunities Trust, it will retain its Elite Rating.”
For investors who prioritise investing with Darwall over the Jupiter European fund, one option is to invest in the manager’s closed-ended fund, which has seven of the same top-10 holdings.
Just like its open-ended counterpart, the Jupiter European Opportunities Trust is a solid performer over the long term, making 685.11 per cent since launch in November 2000 compared with gains of 284.33 per cent from its IT Europe sector and 170.31 per cent from the FTSE World Europe ex UK index. It is the best performer in its sector over the past five and 10 years.
Performance of trust vs sector and index since launch
Source: FE Analytics
The trust has the same annual management charge of 0.75 per cent but its ongoing charges figure of 0.91 per cent is lower than the 1.02 per cent of its open-ended counterpart.
Jupiter European Opportunities is on a discount of 4.35 per cent compared with 1.25 and 2.94 per cent from its one- and three-year averages. It is 18 per cent geared.