Jupiter fund manager Alexander Darwall is leaving the firm after 24 years to set up his own business later in the year. Darwall is fulfilling a long-held ambition to go it alone and has applied for regulatory approval from the FCA for new firm Devon Equity Management.
The board of the Jupiter European Opportunities (JEO) trust, which he has run since 2000, said they would be re-appointing Darwall as manager of the trust once his new firm has been set up.
In April, Jupiter announced that Darwall was stepping down from running the Jupiter European and Jupiter European Growth funds, at the time rated Gold by Morningstar, despite a strong track record of outperforming his peers. Jupiter European has £5.5 billion of assets under management and Jupiter European Growth has £2.4 billion.
Mark Nickols took over the running of the funds this week after the April announcement. He joined Jupiter from Columbia Threadneedle where he was co-manager of the Bronze-rated Threadneedle European Select fund.
In September he will be joined by former colleague Mark Heslop, who managed the five-star rated Threadneedle European Smaller Companies fund. Darwall has agreed not to launch competing open-ended funds for two years.
Morningstar downgraded the open-ended funds to Neutral following the news that Darwall would be handing over to Nichols after 18 years managing these funds. Under Darwall’s tenure Jupiter European Growth has posted annualised growth of more than 15% over 10 years, beating the benchmark and active fund peers. The performance of Jupiter European is even more impressive, with annualised returns of 16.5% over 10 years.
“Investors should have confidence in the continuity of the investment approach that has delivered outstanding returns during his 20 year tenure”, says Ryan Hughes, head of active portfolios at AJ Bell. Jupiter added that Darwall is “fully committed to delivering consistent performance and ensuring a smooth transition of the mutual funds”.
Fund Expert's Brian Dennehy says Darwall "will have done his homework on this", especially with the example of Neil Woodford, who went solo in 2014 when he left Invesco. Dennehy adds that the biggest risk for a fund manager striking out on his own is that of a correction after a long bull market.
AJ Bell’s Hughes points out that with investment trust now the only way of accessing the manager’s skills, demand for its shares is likely to grow, which could push it to a premium - currently the trust sits on a slight discount to NAV, according to Morningstar Direct data.
Morningstar analyst Samuel Meakin praises Darwall’s high-conviction approach, stability and consistency of the management and investment approach. “We think there’s much to like here: an experienced and talented manager, with an effective process that has delivered strong returns over the long term,” he adds.
