HEAD-TO-HEAD: Blackrock vs Jupiter

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The three-year performance of the Blackrock and Jupiter funds versus their benchmark, the FTSE All Share Index. Source: FE Analytics. Fund and index NAVs are in British pounds.

Performance

Because both the Blackrock and Jupiter funds have prominent style biases, Brunt expects one product to do well when the other one isn’t.

Taking 2015 as an example, Brunt said that the Blackrock product performed better as investors were looking for more growth names in the market. However, the Jupiter fund outperformed in 2016, when value stocks, such as those in mining and energy, were in favour.

Source: FE Analytics

Brunt noted that although both funds benefit from the market’s style rotations, both managers have been able to add value through stock selection.

“If you look at performance attribution, both managers have been able to add value in stock selection, so it is not only the investment style that they are taking. It is picking the right stocks within those styles over the long-term that is allowing them to deliver stronger returns than just deliver a ‘smart beta approach’.”

In terms of volatility, the Blackrock fund is slightly more volatile than the Jupiter fund.

Three-year annualised volatility

Source: FE Analytics

Brunt explained that value-oriented funds tend to be more volatile. However, the Jupiter fund is able to lower its volatility because of its quality screen.

“As a consequence of picking more quality names, the fund is slightly less volatile than some of the other pure value names in the market,” Brunt said.

Turning to the Blackrock fund, Brunt said that some of the growth names have a tendency to be volatile because of their higher valuations.

“Because they are so richly priced, one of the key risks with investing with growth managers is that when you have an earnings disappointment, you can often have pretty strong pullbacks in the share price.”

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