HEAD-TO-HEAD: Jupiter versus Neuberger Berman

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INVESTMENT APPROACH

Although both the Jupiter Merian and Neuberger Berman (NB) funds invest across the market-cap spectrum of the US equities universe, they have different investment processes.

Source: Morningstar Direct. As of end-January 2021.

The Jupiter Merian offering is a quant-based fund, while the NB product follows a more traditional bottom-up approach to investing, according to Poole.

The Jupiter Merian fund’s quant methodology draws upon five factors. The market dynamics factor looks at momentum and short-term signals, while dynamic valuation helps the model to shift between value and quality depending on the current market regime. The factors are complemented by a sustainable earnings growth component, analyst sentiment factor and company management factor.

“The factors are pretty standard [in any quant model], but the analyst sentiment that picks up behavioural aspects I think is quite innovative,” Poole said.

The factors enable the model to identify stocks that are likely to perform in the prevailing market environment.

Like other quant funds, the Jupiter Merian offering is not concentrated and may hold anywhere between 150-350 stocks, with a high turnover of 350-500%, according to Poole.

“It is a pretty actively traded portfolio without any real style bias. There are also tight sector and industry limits around its benchmark index, the MSCI North American Index, so it is not deviating too much there,” he added.

Turning to the NB fund, Poole said that it is a traditional bottom-up strategy, with a focus on cash flows.

Holdings fall into three buckets, which are “special situation” stocks, such as companies that are undergoing restructuring and spin-offs or management changes, “opportunistic stocks”, which are names that “have become cheap for temporary reasons”, and “classic stocks”, which have consistent free cash flows and long-term performance.

The buckets are usually split equally, but can move depending on the prevailing market, Poole said.

Unlike the Jupiter Merian fund, the NB offering is more concentrated, with just around 30-40 stocks, and is also less benchmark-aware.

“For example, it tends to have no holdings in the energy, real estate and utilities space, just because the team has a focus on the predictability of cash flows,” Poole said.

Sector allocation

Source: Fund factsheet. As of end-January 2021.

 Top 10 holdings

Source: Fund factsheets. As of end-January 2021.

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