At first sight, it’s hard to believe, but Philip Gibbs’ Jupiter Financial Opportunities Fund is one of the top-performing unit trusts over the past year. The £920m fund, which invests mainly in banks and financial stocks, is up 9% over one year against a 59% drop for the FTSE ASX Financial Index.
How has Gibbs done it? By switching from equities to cash in 2007. Concerned about high levels of household borrowing in America and Britain, the Cambridge history graduate sold out of the market. Equities accounted for just 15% of the fund throughout 2008, falling as low as 5% in September, says The Daily Telegraph. He also took positions in long-dated government bonds, and moved most of his investments outside the UK, avoiding the worst of the fall in sterling.
So where is Gibbs investing right now? “Some opportunities remain” in the insurance sector, he tells Interactive Investor. Valuations are cheap and companies are trading not far from, or at discounts to, their net asset values. “However, there are few stocks that are truly able to be relied upon during the continuing credit squeeze and economic slowdown.” For now, Aviva is the only big London-listed insurer in his portfolio, and 67% of the fund remains in cash and equivalents. In other words, he has a good chunk of money on the sidelines ready to invest.
“Gibbs managed the fund well on the way down, so it will be interesting to see if he can do the same on the way back up,” says Bestinvest’s Adrian Lowcock in The Sunday Times. “I will be watching financial stocks closely and may well increase my investment later this year.”
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Jupiter Financial Opportunities Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| France (gov’t of) 0% TB 25/10/38 | 8.1 |
| France (gov’t of) 0% STRIP 25/04/35 | 6.9 |
| France (gov’t of) 0% OAT 25/10/32 | 6.2 |
| DnB NOR ASA | 1.8 |
| Münchener Rückversicherungs AG | 1.7 |
| Zurich Financial Services | 1.7 |
| Aviva | 1.6 |
| Paternoster | 1.2 |
| Jupiter Second Split Geared Growth | 0.8 |
| Franklin Resources Inc | 0.7 |