Morningstar

Jupiter UK Sml Coms Focus L GBP Inc

Analyst Report
Morningstar's Take
|31/03/2024
by Morningstar Manager Research
Jupiter announced in June 28, 2022, that chief executive officer Andrew Formica intends to retire from his role, effective from 1 October 2022. Formica will be succeeded by Matthew Beesley, the group's chief investment officer, who joined the firm in January 2022. Until he formally takes over, Beesley is promoted to deputy CEO with immediate effect and will retain his global chief investment officer responsibilities during the transition.

Formica, who is planning to relocate to his native Australia, will remain in the business until 30 June 2023 to ensure a smooth leadership transition and to assist with a number of strategic objectives, such as supporting the Asian business and development of the Australian market offering.

Beesley has nearly 25 years of experience in the investment industry. He joined from Artemis, where he had been CIO since April 2020. Previously, Beesley was head of investments at GAM Investments from 2017 to 2020, and before that head of global equities at Henderson. There, he crossed paths with Jupiter’s current CEO, Andrew Formica, who at the time was CEO at Henderson.

The Parent Pillar rating of Above Average remains in place. But leadership transition and a new incoming CIO bring some uncertainties that we will try to clarify when we meet with Beesley as part of our upcoming parent review.
 

Jupiter UK Sml Coms Focus L GBP Inc's recent fee hike and lowered Process Pillar rating result in a downgrade to this strategy's Morningstar Medalist Rating to Negative from Neutral. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the most expensive quintile among peers.



The strategy gets a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in yield exposure and quality exposure compared with category peers. Low yield exposure is attributed to holding fewer stocks with high dividend or buyback yields -- instead, typically holding companies with a stronger focus on growth opposed to returning capital. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The strategy's management team completely turned over about three years ago, raising concerns. This and other weaknesses earn the strategy a Low People Pillar rating, following a recent downgrade from Average. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

 
Morningstar Medalist Rating™
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Morningstar Pillars
PeopleLow
ParentAverage
ProcessLow
 
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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