Three years in . . . and Ross emerges as a star in the making at Jupiter
THIS month marks three years at the helm for Ross Teverson, manager of investment fund Jupiter Global Emerging Markets. The performance numbers look good. Over the past 36 months, he has delivered investors returns better than the average emerging markets fund – 51 per cent compared to 46 per cent. He has also increased the fund’s size from a minuscule £25million to £159 million.
Yet Teverson is ambitious and wants to attract new investors to the fund – something he now has a fighting chance of achieving given the fact that many financial advisers will not back an investment manager until they have established at least a threeyear record on a particular fund.
Like most of Jupiter’s investment managers, Teverson is first and foremost a stock picker, rather than someone who takes bets on market sectors or specific stock markets. He also prefers to assemble a portfolio comprising no more than 50 stocks. It means every position counts when it comes to overall investment performance.
Teverson explains: ‘When investing in a company, I am looking to identify a future positive change in the business which will result in its shares being rerated. Typically I hold the shares for two years although occasionally I will sell earlier or hold a little longer if the rerating comes quicker or takes longer than anticipated.’
His style means that the fund’s portfolio is usually at odds with competitors. For example, it has just 16 per cent exposure to China, considerably less than most rivals. His view is that better opportunities lie elsewhere. He says: ‘The fund has no exposure to Chinese banks. In part this is a result of their indebtedness and also because there are other banks out there in emerging markets which offer the prospect of better returns.’
So among the fund’s bank holdings are Kenya Commercial Bank and Bank of Georgia, listed in London. When he does buy Chinese stocks he is slightly unconventional. So instead of holding internet giant Tencent – a favourite among rival emerging market managers – he prefers to have a stake in US listed – but Chinese based – automation company HollySys.
‘It is a company with great potential,’ says Teverson. ‘It has no debt on its balance sheet, is benefiting from a steady influx of highly skilled Chinese graduates and is beginning to export its goods overseas.’
Although the fund and most other emerging market trusts have had a strong past two years, Teverson still believes that valuations ‘look reasonable’ on historical grounds. ‘They are not cheap compared to two years ago,’ he adds. ‘But they look attractive when compared to other assets such as US equities.’
What he likes about emerging markets is how the asset class has evolved since he has been at Jupiter. Previously, it was primarily considered a ‘commodity’ play, dependent upon commodity prices for markets to boom. But as emerging market economies have grown and businesses have developed in key areas such as healthcare and consumer spending, investment opportunities have broadened. It still means emerging markets are risky investments but not as dangerous as 20 years ago.
As well as Jupiter Global Emerging Markets, Teverson manages the Jupiter Emerging & Frontier Income Trust. Since launch in May last year, its share price is up 16 per cent.