This week, the trials and tribulations surrounding Jupiter Fund managers. As IFAs will know, the firm are in difficulty, Jupiter is a mid-sized generalist active fund manager, squeezed between the passive giants such as BlackRock and Vanguard who are the "Winner takes all" of the fund management space, and the highly specialised niche players with closed funds and the funds run on low budget as cash cows.
Jupiter's trouble is in transferring from one model to another. In the end, financial services businesses fail due to balance sheet problems and Jupiter's balance sheet must creaking. The firm reported net outflows of Â£1.6bn in the first quarter, as overall assets under management decreased by Â£5.2bn to Â£55.3bn, hurt by negative market returns during the three months start of 2022. Given that markets have plunged another 25% since the end of the last quarter 31st March (source IGWD) - you don't need the nose of a bloodhound to smell the blood. Jupiter also acquired Merian Global Investors for Â£370mn in early 2020, and that has brought with it a series of headaches - their Chrysalis fund alone is down 62%.
â€œWhen sorrows come, they come not single spies, but in battalionsâ€ wrote Shakespeare, and while investigating this scandal over my cornflakes I noticed that The Times reported that Jupiter were getting discounts for investing in start up funds. In a world free of inducements? And then I discover that Jupiter fund managers also get paid â€œfeesâ€ for investing in unicorn funds. Fees for investing? A breach of COBS 2.3 - but perhaps like the biggest firm of financial advisers they don't believe the rules actually apply to them, not being on the front line of retail financial services. Remember Barclays Bank and the Qatari Sheikh? This is really semi- theft on hapless retail customers introduced by IFAs. It explains why there are so many different share classes in OEICS - the corruption has been normalised. Depressing stuff, and a reason to consider investing in direct shares.
Finally for those of you who missed one of our best seminars, on ESG, see what Kirsty describes as "One of the best seminars I have seen" run a couple of weeks ago with Sarasin here