Jupiter UK Growth has published its first set of accounts since its transformation into a UK focused trust covering the year ended 30 June 2016. The new strategy began to be implemented immediately following the general meeting of shareholders on 18 April and most of the changes in the company’s investment portfolio were accomplished by the beginning of May. The more recent performance of the portfolio needs to be assessed in this context. The net asset value per share reached 297.76p on 18 April, being the last day of Richard Curling’s tenure as our former portfolio manager. The net asset value per share (with dividends added back) had fallen by 3.3 per cent. since the beginning of the financial year under review, which compares with a total return of 2.2 per cent. in the Company’s then composite benchmark (comprising 75 per cent. FTSE All-Share Index and 25 per cent. FTSE World ex-UK index) over the same period.
Over the full twelve months to 30 June 2016 the share price returned -14.6 per cent and the net asset value per share fell by 13.1 per cent (with dividends reinvested) to 265.40p (reflecting, in part, the immediate sell-off that followed the Brexit referendum vote on 23 June 2016). This compared with a total return on the company’s composite benchmark of 5.5 per cent. the board has resolved to replace the current regular quarterly dividends with a single annual dividend, payable shortly after the annual general meeting in each year.
Due, in part, to a GBP40,000 rebate of management fees by the manager (given within the context of the change in portfolio manager in April) and, in part, to the reduction in the total cost to the company of dividends paid arising from the repurchase of the company’s own shares during the year under review, the board has declared a fifth interim dividend in relation to the year ended 30 June 2016 of 0.60p. The total of all five interim dividends declared in relation to the year ended 30 June 2016 will therefore have amounted to 7.00p. This amount should not, however, be considered to be indicative of the likely future yield on the company’s shares pursuant to the company’s new investment strategy.
The return up until April 2016 – during which period it was managed as a mixed investment portfolio of UK stocks and global funds – was impacted by uncertainty over the health of the global economy, a factor which weighed on asset prices across the world. In particular, the sluggish performance of the UK equity market was a significant headwind to performance. Despite this, the portfolio benefited during this early period from the performance of Dixons Carphone, Direct Line Insurance and DFS, companies which were able to take advantage of the improved UK consumer outlook. The overseas exposure during this period of the financial year contributed positively to performance. The Jupiter European Opportunities Trust was once again the top performer as the concentrated portfolio of growth-oriented companies added significant value in a challenging environment. Meanwhile, the Findlay Park American Fund also contributed positively to performance, as did the M&G North American Value Fund. Both were aided by the robust performance of the US economy and the appreciation of the dollar against the pound.
The period following the strategy change until the end of the financial year was an especially challenging time in UK equities, following the surprise result in the EU referendum and the strong negative reaction by the market towards domestic UK stocks. The fund had a disappointing period as a result and underperformed the FTSE All-Share by a substantial amount – with the bulk of this underperformance coming in the few days between 24 and 30 June 2016. This was largely because of the sharp and often indiscriminate moves in the market, which had an especially big impact on the Company’s positions in general retailers (eg Dixons Carphone), travel companies (IAG and Thomas Cook) and financials, particularly UK banks (Lloyds, Barclays and RBS). Although it falls outside the review period, it is worth noting that many of these stocks continued to rebound during July from their post referendum lows.
JUKG : Jupiter UK Growth caught out by Brexit