HEAD-TO-HEAD: Axa vs Jupiter

123456

Investment approach

“These types of funds need to meet investors’ requirements for extra yield, while mitigating credit and interest rate risks. As a result, identifying uncorrelated securities and managing duration are the managers’ main concern,” said Cheung.

Although both funds have a similar approach to mitigating country risk through diversification and duration risk by actively adjusting exposure across the curve, there are significant differences.

“Axa tends to be more tilted towards Latin America, with large allocations to Brazil and Mexico, whereas Jupiter typically has a bias towards Asia, for instance with a relatively high exposure to India,” said Cheung.

The Jupiter portfolio also tends to have a shorter average duration, with only about 20% allocated to bonds with maturities of over five years, whereas the Axa portfolio’s allocation is often more than 30%, he added.

“The difference is partly due to Axa’s more flexible approach, in contrast to Jupiter’s strategy which tends to be more structured,” said Cheung.

The Axa fund is lead-managed by Sailesh Lad, and he is helped by co-manager Mikhail Volodchenko.

They are the primary decision-makers, and their full autonomy allows them a lot of flexibility, according to Cheung.

“They have access to firm-wide research, but ultimately they determine the fund’s investment strategy based on their own views about country, credit and interest rate risk,” he said.

The Jupiter fund’s manager, Alejandro Arevalo, is aided by two other portfolio managers, and can lean on an inhouse global macro team of seven sector specialists who provide bottom-up bond credit analysis.

Arevalo and his colleagues sit beside Jupiter’s emerging market equity team, “which provides him with a different perspective that can enhance his country allocation and sector selections”, said Cheung.

“It is a highly effective and disciplined process,” he added.

Source: FE Fundinfo. Data in US dollars (4 February 2020)

*since 5 September 2017 (launch of Jupiter fund)

Fund Indicators:

Source: Fund factsheets (31 December 2019)

Market Exposure:

Geographical Allocation

Source: Fund factsheets, 31 December 2019

Top 5 Holdings

Source: Fund factsheets, 31 December 2019

123456