Jupiter Financial Opportunities

LongTermLurker

Masomnia wrote: »

I opted to transfer to the new International Financials fund; decided that with the performance fee Gibbs will probs focus on it more, and maybe leave FO permanently soon to focus on it; it should be more risky, more volatile, and I reckon will therefore perform better over the long term, as bad banks can be profitted from as well as good ones.

er, I don't think the International Financials fund has a performance fee does it? That would be the Absolute Return fund?

Masomnia

LongTermLurker wrote: »

er, I don't think the International Financials fund has a performance fee does it? That would be the Absolute Return fund?

I think they both do; the benchmark of the new financials one is the FTSE Global Financials Index, and apparently there's a 'high water mark' before any fee is payable. Sounds fair enough to me.

LongTermLurker

Masomnia wrote: »

I think they both do; the benchmark of the new financials one is the FTSE Global Financials Index, and apparently there's a 'high water mark' before any fee is payable. Sounds fair enough to me.

Ah, let you off then - must admit I was surprised you'd have made that mistake

Masomnia

Rollinghome wrote: »

What is the benchmark?

I notice that the hurdle for the Blackrock Absolute Alpha fund is the 3 mth LIBOR, which is currently just 0.61%. That hardly seems so excessively challenging to a fund manager that it deserves an additional 20% performance bonus on top of the 1.50% AMC when you could have got a 4% fix by bunging your money in NS&I.

Edit: It seems the Jupiter’s Absolute Return Fund will also be benchmarked against three-month Libor.

Personally, I think it's a nonsense to pay a bonus for returning just a fraction of what could be had from NS&I savings. If a manager can't do better than equal 100% safe savings they should be sacked not rewarded.

Fair points, but having said that, we are at a time of freakisly low interest rates. Two years ago the base rate was more like 5% so I imagine LIBOR wouldn't have been too far off. Getting that kind of return consistantly whether the market rises or falls isn't that easy.

koru

markd wrote: »

Exactly - i'm not surprised they are so keen for people to transfer - 15% performance fee above 3 month LIBOR - just an easy way for Jupiter to jump on Gibbs' success and create extra revenue. They could have at least used a challenging benchmark for the performance fee to be activated - at this rate you'll be paying 15% on all gains! :mad:

I agree that this is disappointing and it is the only thing making me hesitate from putting some money into this fund. However, the point of this fund is that Gibbs has a track record of delivering returns considerably higher than LIBOR in good years, yet losing a lot less than the market in bad years. Gibbs has delivered average compound growth of 19% per annum on his previous hedge fund and lost virtually nothing since the credit crunch.

If Gibbs just puts the money on deposit, earning 3 to 5%, pocketing 15% of that (plus the 1.5% management fee), I think people will soon be withdrawing their money. But if he delivers 20% in the good years and breaks even in the bad years, I'm starting to think that letting them shave off a bit of the gains in the good years might be worth it.

Frankly, if he can replicate the performance of his hedge fund over the last nine years, the performance fee is well worth it. But if it turns out he just got lucky (as Nick Taleb, author of The Black Swan, would probably argue) and can't replicate this, its a bit of a rip-off. If you think the latter, you should logically be putting all your money into the cheapest index trackers.

Personally, I think I will do a bit of both (ie, trackers and funds like this one).

pauldreed

I assume that Gibbs will putting a lot of effort into this fund initially to make it work, but if it doesn't, the losses shouldnt be dramatic considering the nature of the fund, the good standing of the fund manager, and having paid 0% initial fee...
...or am I exposing my lack of investing experience?

koru

pauldreed wrote: »

I assume that Gibbs will putting a lot of effort into this fund initially to make it work, but if it doesn't, the losses shouldnt be dramatic considering the nature of the fund, the good standing of the fund manager, and having paid 0% initial fee...
...or am I exposing my lack of investing experience?

I understand he uses hedging to try to limit the downside, if his bets turn out wrong. I would imagine that this does not ensure the fund can't make a loss, but it is less likely to do so than a long-only equity fund (ie, one which just buys and holds equities, hoping to sell them at a profit in the future).

LongTermLurker

koru wrote: »

I understand he uses hedging to try to limit the downside, if his bets turn out wrong. I would imagine that this does not ensure the fund can't make a loss, but it is less likely to do so than a long-only equity fund (ie, one which just buys and holds equities, hoping to sell them at a profit in the future).

It certainly doesn't mean the fund can't make a loss. Like any other, it's a play on luck and skill, except when shorting's involved, the manager has to be good on two fronts.

The bets run both ways - with shorting, he is betting that a stock will fall. So on the basis that there are bets on one stock rising and one falling, in a good scenario it's heads you win, tails you win.

Conversely...