HEAD-TO-HEAD: Jupiter versus Pimco

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Source: FE Analytics (cumulative returns in US dollars)

Performance

The Pimco fund has achieved 8.2% total return over three years, outperforming its US dollar fund sector average by two percentage points and doing significantly better than the Jupiter fund’s three-year cumulative return of only 2.81%.

“Pimco’s focus on US treasury bonds and high-rated US agency, municipal and securitised issues has supported its long-term performance,” said Poole.

“The fund also tends not to diverge too far away from its [Bloomberg Barclays US Aggregate index) benchmark, which has helped contain its volatility. Capital preservation is a priority for the managers,” he added.

In contrast, the Jupiter fund’s unconstrained mandate allows it to make bigger duration calls, which works well in bull market conditions but makes it vulnerable when interest rates are rising.

“This consequence was evident in the calendar years of 2017 and 2018, when US rates markets were strong and weak respectively,” said Poole.

The Jupiter Dynamic Bond Fund outperformed its sector in 2017, but slumped dramatically throughout most of 2018 when the US Federal Reserve hiked interest rates.

“Jupiter had taken a long position in interest rate-sensitive long-duration bonds, and the fund suffered when interest rates across the yield curve rose,” said Poole.

Discrete annual performance %

 Source: FE Analytics (in US dollars)

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