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Jupiter sees huge fixed income outflows

Fixed income remains fund house’s Achilles’ heel as smaller rivals enjoy asset growth.

Jupiter has suffered £3.1bn ($4.07bn) net outflows in the year-to-date as fixed income remains the asset manager’s Achilles’ heel, while smaller rivals Liontrust and Polar Capital deliver strong AUM growth, as reported by FSA‘s sister publication Portfolio Adviser.

Assets under management fell 1% in Q3, despite modestly positive markets, on the back of £833m net outflows. Fixed income accounted for three quarters of net outflows with £600m pulled, predominantly by European investors. European Opportunities and the Merlin range also suffered outflows.

Total outflows are set to remain at £3.1bn for the full year, according to a Peel Hunt analyst note published after the results. However, negative markets remain a downside risk. Net outflows have slowed from £1bn in Q2 and £1.3bn in Q1.

In H1, analysts predicted Jupiter would suffer £1bn of net outflows but the fund house instead reported £2.4bn was pulled over the six-month period. The €6.9bn Dynamic Bond fund, managed by Ariel Bezalel, was the sole cause of net outflows, Jupiter said at the time.

European Growth, Value Equities and Absolute Return strategies partially offset outflows in Q3. During the quarter, Jupiter launched the Merlin Real Return unit trust, plus the Eurozone Equity and Flexible Income Sicavs.

Polar Capital and Liontrust enjoy AUM growth

In contrast to Jupiter, asset growth at Polar Capital and Liontrust has risen 8% and 5% respectively.

Polar Capital’s AUM of £14.7bn compares favourably to Peel Hunt’s forecast of £14.5bn for the full-year ending March. “However, we are conscious that since the end of the period, markets have been more challenging,” it said in an analyst note following the trading update.

Performance fees at the boutique manager also surprised, hitting £32.5m. This included £5.5m already received compared to zero for the same period last year.

Liontrust’s enjoyed net inflows of £403m lifting AUM to £12bn. Retail investors accounted for £9.7bn of AUM while multi-asset contributed a further £786m.

Fixed income delivers for Liontrust in Q3

While bonds have been a source of outflows at Jupiter, the Liontrust results said it had seen strong client demand for funds managed by global fixed income team.

Fund managers David Roberts, Phil Milburn and Donald Phillips now run £272m across the Strategic Bond, High Yield Bond and Absolute Return Bond strategies. Liontrust first announced the Kames duo, Roberts and Milburn, were joining in August 2017. It hired high yield specialist Phillips from Baillie Gifford in January.

Chief executive John Ions said he expected strong inflows to continue in the global and sustainable fixed income products despite increased volatility in global bond markets. “They are very experienced teams, have strong long-term track records and have flexible investment mandates,” Ions said.

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