Jupiter Income - addition to the Wealth 150+

Kate Marshall | Fri 19 May 2017

The links in this article will take you to Hargreaves Lansdown’s main website for more information. Please be aware that if you wish to join any of the benefits in your company Plan you must return to this website to apply.

• Ben Whitmore is a disciplined and seasoned investor in UK equities with the support of assistant manager Dermot Murphy
• The manager’s value style of investing offers something different to others in the sector
• We have negotiated a reduced ongoing charge for Hargreaves Lansdown clients

Our view

Ben Whitmore adopts a value-focused, contrarian investment approach. He seeks companies that have fallen out of favour and been neglected by other investors, which are nevertheless supported by healthy balance sheets, disciplined management teams, and sound franchises. He invests on the basis these companies demonstrate recovery potential and any weakness is temporary. Once the longer-term potential is recognised by other investors, their share prices could be set to benefit.

Ben Whitmore invests in this type of company in the Jupiter Income Fund. He is steadfast in his investment process and rigorous in his analysis of individual companies. We favour his purity of thought and ability to sieve through the market noise that often clouds investors’ judgment.

The manager is a seasoned investor in UK shares with a track record spanning almost 17 years. We feel his focus on unloved and out-of-favour areas of the market, combined with a clear and disciplined thought process, means the fund offers something different to many of its peers. We feel it could provide diversification to a wider equity income portfolio.

Reduced ongoing fund charge

We recently negotiated a reduced fee on this fund, exclusively for Hargreaves Lansdown clients. The new discounted ongoing fund charge of 0.60% is reduced from the standard ongoing charge of 0.94%. This is in addition to the Vantage charge of up to 0.45% per year. Existing investors are able to convert their units into the new share class in order to receive the lower charge.

We are optimistic about the fund’s long-term performance potential and, combined with the reduced ongoing charge, we are pleased to announce the fund’s addition to the Wealth 150+ list of our favourite funds with the lowest ongoing charges.

First-class performance potential

Ben Whitmore has a long history of outperforming the UK stock market. Our analysis suggests a combination of strong stock selection and shrewd sector allocation has added value for investors over the long term. The manager assumed responsibility for the Jupiter Income Fund in January 2013 and over this time the fund has grown 58.8%* compared with 46.2% for the FTSE All Share Index, although please remember past performance is not a guide to future returns.

Ben Whitmore previously focused on managing portfolios targeting growth rather than income, however his investment style means he has tended to favour higher-yielding companies throughout his career. We would expect him to focus on both income and capital growth (total return) over the long term, rather than focusing solely on producing a high income. The fund currently yields 3.5%, although this is not an indicator of future income.

Companies that have fallen on hard times can remain out of favour with investors for prolonged periods. This means a value, or recovery, style of investing can lead to periods of underperformance. That said, Ben Whitmore has a relatively consistent track record of outperformance against the broader UK market. His funds have also tended to demonstrate lower volatility than the FTSE All Share Index and held up relatively well in a falling market, although this means they have lagged a rapidly rising market.

How the fund is currently invested

The fund currently has a bias towards the financials and consumer services sectors, where 25% and 20% of the portfolio is currently invested, respectively.

The share prices of many financials businesses have struggled to make headway since the 2008 financial crisis. Last year the manager took the opportunity to invest in a number of financials companies with exposure to the emerging markets, which also experienced a period in the doldrums prior to 2016. Banks HSBC and Standard Chartered, as well as Ashmore, an asset manager specialising in emerging market debt, currently feature in the portfolio. Shares in RBS are also held in the fund and recently performed well after announcing its first quarterly profits since 2015.

In the consumer space, retailer Marks & Spencer, which has struggled with falling clothing sales in recent years, was added to the portfolio last year on account of its attractive valuation and appointment of a new chief executive. The business has since closed some of its more inefficient stores, as well as overseas stores in China, and plans to open more food stores, which is an area where the company has been more successful. The shares have recently performed well.

Please note the fund’s charges are taken from capital, which boosts the yield but can erode the potential for capital growth.

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.