Jupiter Dynamic Bond L EUR Acc

Analyst Report
Morningstar's Take

by Evangelia Gkeka
Jupiter Dynamic Bond benefits from the experience of its lead portfolio manager, continuity in the execution of its flexible investment process, and strong absolute and risk-adjusted returns since inception. The Morningstar Analyst Rating for the strategy’s clean share class (D EUR) remains at Silver. More-expensive share classes range from Bronze to Neutral.

Veteran portfolio manager Ariel Bezalel has been at the helm here since inception in 2012 but has run the UK-domiciled mirror since launch in 2008. He has skillfully used the flexibility afforded to him by the investment process. Bezalel, investment manager at Jupiter, boasts more than two decades of portfolio management experience; before bringing this strategy to market, he successfully managed the fixed-income portion of multi-asset mandates at Jupiter. In a bid to formalise the team structure and provide guidance on continuity, analysts Harry Richards and Vikram Aggarwal were promoted to assistant fund managers in 2016 and 2017, respectively. In June 2019, Richards was further promoted to comanager. Bezalel is supported by a team of 17 sector-focused analysts (including four portfolio managers who also have sector coverage or provide ideas) that has grown over the years along with the level of assets for the strategy, which currently stand at GBP 10 billion, including also GBP 145 million in the recently launched Jupiter Dynamic Bond ESG, the Article 8 version of Jupiter Dynamic Bond.

Idea generation greatly benefits from the flexible investment process and focused team. Investment decisions are debated and decided in weekly team meetings. Bezalel uses third-party research to inform his macro views and establish the strategy’s top-down stance, which is implemented via analysts' thoroughly researched single-name and sector recommendations.

The portfolio is constructed with a barbell approach balancing the capital preservation features of high-quality government bonds and the income generation of high-yield debt (including subordinated financials). Bezalel's active exposure and duration management and opportunistic exposure to select emerging markets have added value over the years. The multiple return drivers employed by the manager have resulted in strong absolute and risk-adjusted returns since inception. However, for the year to date as of end September, the strategy has underperformed and its barbell approach did not provide diversification as it did in previous periods of market weakness. Overweight duration positioning against peers in developed markets government bonds, mainly Australia and US Treasuries, was the main detractor.
Morningstar Medalist Rating™Continues to be a strong proposition in the flexible-bond space.
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Morningstar Pillars
ProcessAbove Average
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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