ALPHA GENERATION THROUGH
FOCUSED RISK MANAGEMENT
Jupiter Corporate Bond Fund
Corporate bonds: a diverse asset class, where credit selection is the key to success
Bonds issued by companies have long been thought of as a mainstay of a well diversified investment portfolio.
Overall, the attractions of the asset class are relatively plain to see; corporate bonds have the potential to offer investors an attractive total return, derived largely from the regular “coupons” (interest) they pay to their investors. Additionally, corporate bonds have the potential to provide capital growth, where an investor is able to identify and purchase bonds trading at cheap valuations, and which subsequently enjoy price appreciation.
While recognising the many appeals of corporate bonds, it is also important to understand that they do not form a homogeneous investment universe. Indeed, the wide variations in risk and reward characteristics of different parts of the corporate bond market mean that there are significant differences between funds in the IA £ Corporate Bond sector.
This collection of infographics has been designed to help explain the distinctive features of the Jupiter Corporate Bond Fund, and why we believe it compares so favourably with many of its larger peers.
Active, pragmatic and risk aware
The pillars of our investment philosophy
We believe there is substantial scope to add alpha in the asset class through judicious credit selection and a willingness to be active and flexible.
Active
pragmatic
risk aware
Utilise duration and credit exposure as key levers of risk adjusted returns.
Sweat the asset class.
Assess GBP investment grade in a global context.
Fund positioning must reflect our evolving views of a changing world.
We are not inherently aggressive, or defensive, or long duration, or short duration.
Prioritise capital preservation and mitigate drawdown risk.
Focus on liquidity (larger, highly tradable corporate bonds).
The fund is always appropriately positioned by the fund managers according to their assessment of the current macro and micro economic landscape.
Risk management is at the heart of the fund’s investment process. The fund managers focus on in-depth on credit research to understand business and financial risks.
The fund managers take a high conviction, active approach to managing the fund. They use duration and credit exposure as they sweat the asset class in search of strong risk-adjusted returns.
liquidity
To maintain a high level of liquidity the fund managers focus the vast majority of the portfolios on issues greater than £250 million in size. This allows them flexibility in their asset allocations and ensures the scalability of the investment process as the fund grows.
LIQUID
> £250 MILLION
middle market
< £250 MILLION
Source: Jupiter, as at 31.12.2020.
Liquidation profile: 97.8% of fund can be liquidated in 1 day.
important information
Fund-specific risks: The fund can invest up to 20% in non-rated bonds. These bonds may offer a higher income but carry a greater risk, particularly in volatile markets. In difficult market conditions, it may be harder for the manager to sell assets at the quoted price, which could have a negative impact on performance. The fund may use derivatives which may result in large fluctuations in the value of the fund. Counterparty risk may cause losses to the fund. In extreme market conditions, the Fund’s ability to meet redemption requests on demand may be affected. The Key Investor Information Document, Supplementary Information Document and Scheme Particulars are available from Jupiter on request. This fund can invest more than 35% of its value in securities issued or guaranteed by an EEA state.
This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the Fund Managers at the time of writing, are not necessarily those of Jupiter as a whole and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given. Jupiter Unit Trust Managers Limited (JUTM) and Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ are authorised and regulated by the Financial Conduct Authority. No part of this document may be reproduced in any manner without the prior permission of JUTM or JAM.
DISCIPLINED AND FLEXIBLE
The fund’s investment process begins with an assessment of the global macro landscape, and incorporates detailed analysis on each issuer. The process is both holistic and highly repeatable, with the aim of ensuring appropriate fund positioning throughout the market cycle.
Global macro-economic assessment
Top-down credit valuation analysis
Bottom-up valuation filter - Proprietary market screening tools
Fundamental credit analysis
Investment
2-IN-1 OUT POLICY
dodging bullets
Both fund managers must agree on any additions to the portfolio, but if either manager has concerns, the position is reduced or removed.
The risk/return balance in credit is very much skewed to the downside, as a downgrade or even default can destroy many years of coupons. A key part of the fund’s investment process is therefore selecting issuers with robust business models and a very low likelihood of a deterioration in credit quality.
MEET THE TEAM
The Jupiter Corporate Bond Fund has been jointly managed by Harry Richards and Adam Darling since April 2018. The pair bring complementary skills to credit portfolio management, combining detailed analysis on corporates and their capital structures, with a deep understanding of the macro environment.
HARRY RICHARDS
Fund Manager
Harry joined Jupiter in 2011. He is co-Fund Manager, alongside Adam Darling, of the Jupiter Corporate Bond Fund (Unit Trust). He is also Fund Manager of the Jupiter Strategic Bond Fund (Unit Trust) and Jupiter Dynamic Bond fund (SICAV) alongside Ariel Bezalel. Harry has a degree in Chemistry from Oxford University and is a CFA® charterholder.
ADAM DARLING
Fund Manager
Adam joined Jupiter’s Fixed Income team in February 2015. He is fund manager of the Jupiter Global High Yield Short Duration Bond fund (SICAV) and co-fund manager, alongside Harry Richards, of the Jupiter Corporate Bond fund (Unit Trust). Adam began his investment career in 2000. Prior to joining Jupiter, Adam worked at Barclays, Société Générale and Morgan Stanley. Adam has a degree in Modern History from Oxford University.
Harry and Adam have significant credit research resources at their disposal, while benefiting from the holistic view of global fixed income markets that comes from being part of Jupiter’s broader fixed income team.
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Assistant
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Credit Research
and Analysts
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For professional and institutional investors only. Not for retail investors.
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of portfolio
95%
of portfolio
5%
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