Jupiter has announced that Alexander Darwall will step away from the management of the Jupiter European and Jupiter European Growth funds later in 2019. Following a transition period, Mark Nichols will assume the role as sole manager. Nichols was comanager of Threadneedle European Select alongside lead manager David Dudding, and he also has portfolio management experience prior to that from his time at F&C, but generally not in a sole manager role. Upon taking over here, Nichols will have the latitude to implement his own approach, and the exact shape the portfolio will take is not clear at this stage. Our previous positive view of this strategy was largely predicated on the experience of Darwall, and the consistency and stability he provided in implementing his proven approach over his lengthy tenure. As a result, we have moved the Morningstar Analyst Rating to Neutral from Gold.
Darwall has managed the strategy since February 2001. Prior to joining Jupiter in 1995, he was executive director of European research at Goldman Sachs. In addition to this strategy, he has also managed Jupiter European Growth (SICAV) since 2007 and Jupiter European Opportunities (Investment Trust) since 2000. All are managed using the same approach, look for the same types of companies, and have a high level of commonality.
What About New Manager Mark Nichols?
Upon taking over here, Nichols will have the latitude to implement his own approach, and its exact nature remains to be seen at this stage. The rest of this section refers to Darwall’s approach. The bottom-up investment process has a strong emphasis on in-depth understanding of how a company works and on maintaining regular contact directly with its management. Building strong company relations has been a key factor in the manager getting more out of company meetings, which are essential to the process. This helps to mark out the approach relative to peers.
The manager aims to invest in companies that can sustain profit growth and margins over a long period. To this end, he looks for companies with a good track record of profitability, proven product and business model, evidence of entrepreneurial endeavour, and the prospect of above-average growth opportunities. He likes firms with differentiated products or services, a dominant market position, and thereby superior pricing power. He seeks honest, open, and accountable management teams that he can trust and work with. There is no set time horizon when buying a stock; Darwall is happy to continue to hold on to successful investments as long as the strong business and management fundamentals remain in place. If a position underperforms but his conviction remains strong, he will often buy more on any price weakness.
