HEAD-TO-HEAD: Jupiter versus Pimco

123456

Investment approach

The Jupiter Dynamic Bond Fund and the Pimco Total Return Bond Fund both adopt a combination of top-down and bottom-up strategies to build their portfolios.

However, they have slightly different emphases, which is reflected in their allocations and investment styles.

Pimco aims to maximise total return consistent with the preservation of capital and “prudent investment management”, according to the fund’s factsheet. Jupiter’s main objective is to achieve a high income with capital growth from a portfolio of global fixed interest securities.

“The result is that the Pimco fund is more conservative, which is also evident in its strategy of not diverging too far from its stated benchmark, the Bloomberg Barclays US Aggregate index,” said Poole.

“The Jupiter fund is basically unconstrained and has no specific index to diverge from,” he added.

The starting point for Pimco’s bond fund strategy is the “very clear cyclical and secular global investment outlook that is agreed across all of the firm’s strategies worldwide,” said Poole.

The fund’s top-down process is augmented by dedicated specialists advising on interest rate direction, likely yield curve shifts and relative value trades.

The benchmark index sets the guidelines for the fund, and the managers with their extensive support team, find ways to add value within those constraints.

“Meanwhile, bottom-up analysts provide ‘tactical’ value through credit research, and especially from identifying opportunities in securitised products and municipal bond issues,” said Poole.

By comparison, the Jupiter fund is also well-supported by credit analysts, but they have a wider geographical remit than the Pimco team. For instance, they make extensive country visits which helps determine in-house credit ratings.

“These are a valuable resource for the fund’s manager, Ariel Bezalel, that complements his top-down perspective, and supplements the external research he perhaps has to rely on more than the Pimco managers” said Poole.

However, Bezalel has far more flexibility than the three Pimco fund managers over credit selection and duration positioning for his fund. As a result his fund tends to be “higher conviction”, he added.

Source: FE Analytics, except: *fund factsheet 31 May 2019, **fund factsheet 30 June 2019. Data in US dollars (1 August 2019)

Top 6 Holdings

Source: Fund factsheets, *31 May 2019, **31 March 2019

123456