How one top-performing fund fell from grace.
Most of us have a favourite fund manager. Someone we trust to deliver the goods, year after year. Someone who justifies those higher fund charges. Who gets it right more often than they get it wrong.
For many of you, that manager is Neil Woodford at Invesco Perpetual. Or maybe Nigel Thomas at Axa Framlington. Or Mark Mobius at Templeton Emerging Markets. Or Angus Tulloch at First State.
For me, it was Philip Gibbs at Jupiter.
I picked out Philip Gibbs as My Favourite Fund Manager in September 2009. At the time, he deserved all the bouquets I could throw at him.
In the 12 years since launch, his £481m fund Jupiter Financial Opportunities had delivered a total return of 817%, against just 25% for its benchmark sector, FTSE Financials. At one point, it was the best-performing fund a UK investor could buy.
Even more impressively, Gibbs had enjoyed a good credit crunch. In fact, a spectacular one. The last place you wanted to be invested in autumn 2008 was financials, but that didn't bother Gibbs.
While international blue-chip banking stocks were tumbling like aristocrats' heads in the French Revolution, Gibbs was calmly doing his knitting, safe in the knowledge that his fund was parked in US Treasuries.
That made him one of the few fund managers to keep his head in the autumn stock market terror. After the carnage, he was managing a mighty 15% of my portfolio.
Gibbs also joined in the post-March 2009 rally, and enjoyed a pretty positive start to 2010. Unfortunately, for Jupiter Financial Opportunities and for me, it's been downhill ever since.
The fund has fallen 14% over the last 12 months. Over three and five years, it has delivered precisely 0%. That's zilch. Nil. Nada. That's hardly what you expect from your favourite fund.
Even Scottish Widows UK Growth, recently named and shamed in the latest Bestinvest 'Spot the Dog' survey, did better than that. Oh Philip, where did it all go wrong?
It's delicious, it's delightful it's… de Blonay
Gibbs didn't so much go wrong, as go. Officially, he only left the fund for good in October 2011. But it appears he was easing himself out long before then.
In June 2010, respected New Star manager Guy de Blonay was appointed co-manager of Jupiter Financial Opportunities. I thought I was getting two top managers for the price of one, but it didn't turn out that way. A few months later, de Bloney was appointed lead manager, while Gibbs played with his new toy, Jupiter Absolute Return. I stuck by Jupiter Financial Opportunities, because I assumed Gibbs still had a major say.
de Blown it!
Betting on an illusory banking recovery didn't help. Nor did last year's emerging market downturn, to which the fund was exposed. There have been some positive signs this year, for which you can probably thank ECB President Mario Draghi's LTRO splurge, but de Blonay still has a long way to go in my eyes.
Although that isn't really the point. I bought Gibbs, but I've ended up with someone else. And that's just one of the dangers of falling for a fund manager. They move on. Or they lose their way. Gibbs' sparkling talent for making bold sector and regional calls also appears to have lost its shine, as Jupiter Absolute Return has done nothing since launch in December 2009.
Thanks for the memories
Whenever I confront independent financial advisers about the high charges on unit trusts, they always say it is a price worth paying for access to proven market-beating managers.
The problem is that even good managers go wrong (in a way that trackers don't). But you still cough up the same premium rate for their services.
Earlier this week, I sold half my holdings in his fund. In a week or two, I will probably sell the rest. At that point, this fund will no doubt soar!
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> Harvey Jones holds units in Jupiter Financial Opportunities.