HEAD-TO-HEAD: Axa vs Jupiter

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Source: FE Fundinfo. Cumulative returns in US dollars since launch of the Jupiter fund.

Performance

Since its launch is September 2017, the Jupiter fund has outperformed the Axa product, posting a 12.12% cumulative return compared with 9.46% by its rival. Both funds have comfortably performed better than the sector average of 3.5%.

“The primary objective of these types of funds is to generate a high absolute return, made up of income and capital appreciation, although the latter is necessarily constrained by the short duration of the securities in their portfolios,” said Cheung.

“There is no need to hug a benchmark, and neither of these funds do so,” he added.

Instead, they tend to target the cash rate plus 4%, and both Axa and Jupiter manage to achieve that objective, according to Cheung.

“They meet investors’ hunger for yield, and spread credit and liquidity risk through diversification,” he said.

The annualised volatilities are 2.01% for Axa and 1.48% for Jupiter since September 2017, and the funds have information ratios of 1.33 and 1.49 respectively, reflecting their healthy risk-adjusted returns.

Both funds have around 150 individual holdings, which range across geographies and sectors, so even when a country has problems – for instance Turkey last year – then their lack of concentration means they are well-positioned to ride out any specific negative credit event.

Yet, the Jupiter fund manager has had more success than his Axa rival. His fund has outperformed in each of the two full calendar years since its inception, partly by having a greater allocation to better quality credits and a shorter duration positioning to cope with wider market volatility.

Discrete annual performance %

 Source: FE Fundinfo

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