Can you give a brief overview of your strategy in terms of what you are trying to achieve for investors, your investment process and the make-up of the investment team?
The Fund aims to offer a differentiated proposition for both Responsible / Sustainable investors and mainstream UK Income investors: for Responsible / Sustainable investors, a full committed Responsible investment product with a different factor exposure focused on Income generating stocks generally on lower valuations; for mainstream income investors a defensively oriented Income fund without the significant overweights in Energy, Mining, Tobacco and Banking stocks that normally characterise the UK income sector. To this end it invests in companies that are both environmentally and socially responsible, as well as being quality businesses with attractive market positions, robust balance sheets and good cash generation.
We apply an extensive exclusions policy to screen out companies and sectors which do not fit our view of long-term environmental and social responsibility. This includes (but is not limited to) arms, alcohol, fossil fuel extraction, gambling, tobacco and pornography, as well as the automobile and aviation industries. In addition, detailed qualitive ESG analysis of stocks is in place to catch anything problematic that might pass through those screens.
Within the framework of these responsible investing principles, the fund looks to invest in businesses that can help defend and grow wealth over the long term while also providing an income. The fund is also an active steward of its investments.
The fund is managed by James Moir, who joined Jupiter in 2017 having previously worked at UK Financial Investments helping to oversee the UK government's holdings in RBS and Lloyds.
How are you positioning your portfolio for 2023?
The fund is run as a relatively low-turnover portfolio that takes long term positions and doesn't make big allocation decisions based around short-term macroeconomic data. In addition, the exclusions policy and the focus on generating an Income for Unitholders do represent significant factors in portfolio construction on a through the cycle basis. That said, in an economic situation that has been highly volatile for an extended period of time now, the portfolio is consciously positioned without much of an overall bias towards either companies reliant on the economic cycle or those that are fully mature, ex-growth defensive businesses. Balance is the order of the day, but the Fund retains a strong focus on high Quality holdings across both more defensive and more cyclical stocks.
Can you identify a couple of key investment opportunities for your fund you are playing at the moment in the portfolio? This could be at a stock, sector or thematic level.
The Utilities sector is a long-term overweight position for the fund, largely because of the key role in making the energy transition happen, as well as being a defensive sector that can still generate growth, while also paying a significant yield to shareholders. Within the sector, the fund manager favours stocks like National Grid, which should benefit from a necessary expansion of the core electrical grid, and SSE which has a fast-growing pipeline of offshore wind generation to enhance its renewables capacity. Outside the UK, the fund also invests in Italy's Enel, a global ‘supermajor' when it comes to renewable energy, and France-based Veolia which focuses on the water and waste industries. Holding positions in this sector based outside the UK also diversifies the fund's regulatory risk, which is of course highly material for this industry.
