Jupiter Income - investing differently from the crowd
Kate Marshall | Thu 28 June 2018
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- Ben Whitmore is prepared to do something different from most investors
- It means he often invests in unloved companies, which could later perform well
- The fund could help diversify an income portfolio
Our View
We like fund managers who are prepared to do something different from the crowd. It won't always feel comfortable, but it can provide the opportunity to perform better than other investors.
Ben Whitmore is a manager who thinks differently. He invests in companies that have been cast aside by other investors, possibly because they've been through a tough patch. But he'll only invest if he thinks the setback is temporary.
Once the company recovers, he aims to sell their shares at a higher price and move on to the next opportunity. In the meantime he collects the dividends these companies pay. These are paid out to the fund's investors, or reinvested back into the fund, depending which unit class you hold. The fund currently yields 3.60%, though this isn't guaranteed or a reliable indicator of the income paid in future.
We like the fact Ben Whitmore sticks to his process through thick and thin. He won't get it right every time, but it's an approach that’s worked well for investors over the long run. We think the fund could help diversify an income portfolio and it currently features on the Wealth 150+ list of our favourite funds.
Will value investing have its day in the sun?
In recent years, investing in undervalued and out-of-favour companies (also known as value investing) hasn't always worked. A lot of investors have preferred companies that are already in favour and have more obvious growth potential. This might be because they're already growing their earnings at a more predictable rate.
Ben Whitmore says value investing has been through one of its worst periods in history. The gap between growth and value is much wider than it's been in the past, and it's unlikely to stay this way forever. History shows different investment styles come in and out of favour. At some point value could perform better, though there's no guarantees when or if this will happen.
How has the fund performed?
Jupiter Income was added to the Wealth 150+ in May 2017. It's since performed well even though value stocks have tended to underperform growth companies. Over this time it's grown 7.6%*, performing better than the broader UK stock market and the average fund in the IA UK Equity Income sector.
It's also done well over the long term. The chart below shows the fund's performance since Ben Whitmore took over management in January 2013. Past performance isn't a guide to future performance though.
Jupiter Income - peformance under Ben Whitmore
Past performance is not a guide to the future. Source: *Lipper IM to 31/05/2018.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| May 2013 -
May 2014 |
May 2014 -
May 2015 |
May 2015 -
May 2016 |
May 2016 -
May 2017 |
May 2017 -
May 2018 | |
| Jupiter Income | 12.6% | 7.7% | -3.6% | 24.0% | 5.9% |
| FTSE All Share | 8.9% | 7.5% | -6.3% | 24.5% | 6.5% |
| IA UK Equity Income | 11.8% | 10.1% | -4.2% | 18.9% | 3.9% |
Past performance is not a guide to the future. Source: Lipper IM to 31/05/2018.
Investments in the oil & gas sector helped performance over the past year. The oil price recently reached its highest level since 2014 and benefited oil and energy companies, including BP. Anglo American also performed well and Ben Whitmore took this as a chance to take some profits.
Pearson, the education and publishing company, also recently recovered. A lot of investors thought it would struggle to go from publishing printed text books to creating online educational material. So its share price has been weak in recent years. But the company recently announced it expects to see its first annual rise in profits in six years in 2018. Sales have also remained stable, and cash flows have increased, while debts have reduced.
Aside from energy and mining, Ben Whitmore sees the most value in the consumer services sector, including retail. Some high-street shops have struggled to stay in touch with the modern consumer, while technology has helped online retailers, but been a challenge for others. He's invested in companies he thinks will eventually adapt and change for the better, such as Marks & Spencer and Tesco.
The fund’s charges are taken from capital. This boosts income, but reduces the potential for capital growth.
Please read the Key Features/ Key Investor Information in addition to the information above.