Jupiter European pays £13m performance fee – During the twelve months to 31 May 2018, the total return on Jupiter European Opportunities’ net asset value was 10.2%. This compares with a return of 0.9% on the benchmark index and a total return on the middle market price of 11.3%. During the financial year to 31 May 2018 a performance fee of GBP13 million, equal to 1.4 per cent of the company’s net assets, was earned by the investment adviser as a result of the “significant net outperformance of its benchmark index”.
Speaking about the choice of benchmark, the chairman says “The Company’s benchmark index since launch, the FTSE World Europe ex UK Total Return Index, has a nil weighting to UK listed companies, whereas your Company has a 16 per cent. weighting to UK listed companies and the comparable FTSE All World Europe (including UK) Index has a 29 per cent. weighting to UK listed companies. The portfolio manager considers the locus of activities for investee companies to be more relevant than the venue of listing, with many ‘European’ companies choosing historically to list on the more liquid London Stock Exchange than elsewhere. Since launch in November 2000 the FTSE World Europe ex UK Total Return Index has produced a total return of 171.7 per cent whereas the FTSE World Europe Inc UK Total Return Index has produced a return of 159.3 per cent and your Company has produced a total net asset value return of 757.8 per cent (net of all fees and expenses). The FTSE World Europe ex UK Total Return Index outperformed the FTSE World Europe Inc UK Total Return Index over the 3 and 5-year periods to 31 May 2018. Accordingly, the board consider the FTSE World Europe ex UK Total Return Index to be the most appropriate benchmark index for the Company; it has in recent years been the more challenging index for the portfolio manager to outperform and the board consider it likely to continue to be the more challenging index to beat over the medium term.”
Extract from the manager’s report
“There were two significant detractors to performance. The worst was Provident Financial, the UK non-standard credit company. We failed to recognise the vulnerability of the business model and management failings. Recognising our mistake, we sold the holding. Inmarsat, the UK based satellite company, has also been a poor investment. There has been price pressure in its core maritime business whilst its new broadband offering for air travel is still starting up. Results have been disappointing.
Nevertheless, we have decided to retain this investment. The underlying rationale, namely that it is singularly well placed to benefit from the technology requirements of ship automation and burgeoning aviation broadband demand, still holds true. Lesser underperformers included Arrow Global, the UK debt collection business. Whilst the share price has dropped the company continues to make good progress and we continue to hold the shares.
On the positive side, by a considerable margin the biggest single contributor to performance was Wirecard, the German listed payment services company. Shares in this company, a longstanding investment, have been volatile in the past. Indeed, in the 2016 calendar year, the precipitous fall in the share price was a significant factor in explaining the portfolio’s poor performance. However, we always concentrate on the fundamentals of any company. Wirecard continues its rapid yet steady progress. The next most important contributor was Grenke, the German leasing company. Like Wirecard it is a longstanding holding; and like Wirecard it is a beneficiary of the challenges faced by the mainstream banks. We believe that their demonstrably successful business model will continue to grow. Other important contributors to performance were Amadeus, the Spanish travel technology company, Deutsche Boerse, the German stock exchange, and Dassault Systemes, the French technology company. These three companies are all ‘winners’ from technology. Amadeus is deeply embedded in the fulfilment of airline ticketing; and it is extending its reach into the business of hotel reservation technology. Deutsche Boerse, notwithstanding the disappointment of its failed plan to merge with the London Stock Exchange, continues to benefit from the regulatory driven trend to ‘on exchange’ trading. Dassault Systemes is winning by building on its leadership in design and manufacturing software.”
JEO : Jupiter European pays £13m performance fee