Jupiter Sec SplitTst Jupiter Second Split Trust PLC : Interim Management Statement
September 12 2012 - 5:30AM
UK Regulatory
TIDMJSS
Jupiter Second Split Trust PLC
Interim Management Statement for the three months ended 31 July 2012
The Board of Jupiter Second Split Trust PLC (the "Company") is pleased to
announce its Interim Management Statement for the quarter ended 31 July 2012.
The following report relates to the performance of the Company's investment
portfolio in the three months leading up to 31 July 2012.
Investment Manager's Report for the Quarter Ended 31 July 2012
For the period from 1 May 2012 to 31 July 2012, the Company's Total Assets have
increased by 1.2 per cent.* compared to 0.2 per cent. for the 3 month sterling
LIBOR.
Manager's Review
Review
Eurozone uncertainty and concern about the pace of economic slowdown in the US
and China dominated the period under review. Asset markets were volatile in May
with a growing backlash against German-led austerity destabilising the political
fabric of the region. The coalition government in the Netherlands collapsed,
while the rise of radical political parties in Greece raised concerns about the
potential exit of the country from monetary union. Meanwhile Spain's borrowing
costs soared after it was forced to inject EUR19bn into Bankia, a move which pre-
empted a EUR100bn in bailout funds from the EU in support of the country's
beleaguered banking sector. Sentiment improved in June after a second election
in Greece produced a pro-euro coalition. However, investors remained concerned
about Spain's intensifying debt problems and signs of weakness in Europe's core
economies. Equity markets ended the period strongly, supported by hopes of a
shock-and-awe policy announcement by the ECB after the central bank's president
Mario Draghi said he was committed to doing "whatever it takes" to defend the
euro. Growing expectations that the US Fed might announce further action in late
August added further support. Bond and currency markets, however, remained
deeply concerned about Europe's problems. Yields for the two year bonds of a
number of perceived havens (e.g. Germany, Austria, Netherlands, Finland and
France) turned negative at a time when the government debt servicing costs for
Spain and Italy remain unsustainably high.
The portfolio made headway during the period. Our short position in the euro was
particularly beneficial, while longs in Australian government bond positions and
the corporate debt of tobacco giant Altria also added value. Less successful
were our short positions in European retailers and we took the decision to close
these as corporate earnings have generally defied the slump in economic
conditions in southern Europe. We also reduced our long position in Barclays
corporate debt on concern about the LIBOR-fixing revelations and remained
cautious about asset price risk in the face of economic and policy uncertainty
in Europe.
Investors are once again looking to central banks to buttress asset markets
against the risks posed by the eurozone crisis and global slowdown. However, the
potential for disappointment remains high, particularly given the
ineffectiveness of policy to boost private sector growth in recent years. This
is particularly true in Europe where the outlook remains fraught and the ECB is
struggling to find ways to moderate the flight of money from the south.
Meanwhile Germany remains fiercely reluctant to support weaker economies in ways
that might create disincentives for maintaining fiscal disciplines. The
monetisation of bonds is seen as one of those disincentives. We have now reached
a stage where the persistently dysfunctional political process in Europe has led
bond markets to question the ability (and long term appetite) of officials to
ultimately hold the monetary union together. In our view, these pressures
continue to support our overall bias towards the underperformance of the euro.
Philip Gibbs
Fund Manager, Jupiter Asset Management Limited
Total Assets as at 31 July 2011: GBP237,749,842
Shares in Issue on 31 July 2011:
432,723,586 Zero Dividend Preference shares
216,361,793 Geared Ordinary shares
+-------------------------+----------------+---------------+-------------------+
| |Net Asset Value |Market Price |Premium/ (Discount)|
| |(p) |(p) | |
+-------------------------+----------------+---------------+-------------------+
|Geared Ordinary excluding| | | |
|income/expenses |40.21 | | |
+-------------------------+----------------+34.00 |(15%) |
|Geared Growth including | | | |
|income/expenses |40.37 | | |
+-------------------------+----------------+---------------+-------------------+
|Packaged Units excluding | | | |
|income/expenses |109.89 | | |
+-------------------------+----------------+105.00 |(4%) |
|Packaged Units including | | | |
|income/expenses |110.05 | | |
+-------------------------+----------------+---------------+-------------------+
|Zero Dividend Preference | |31.75 |5% |
|shares |34.84 | | |
+-------------------------+----------------+---------------+-------------------+
Underlying Currencies as a Percentage of Gross Currency Exposure*
+-----------------------------+------+
| UK Sterling (base currency) | 100% |
+-----------------------------+------+
| US Dollar | 9% |
+-----------------------------+------+
| Canadian Dollar | 14% |
+-----------------------------+------+
| Euro | -27% |
+-----------------------------+------+
| Japanese Yen | 6% |
+-----------------------------+------+
| Australian Dollar | -9% |
+-----------------------------+------+
| Swiss Franc | 1% |
+-----------------------------+------+
| Norwegian Krona | 6% |
+-----------------------------+------+
| | 100% |
+-----------------------------+------+
*The fund is sterling based. This table aggregates physical and synthetic
exposures in the portfolio.
Country Allocation as a Percentage of Total Assets*
+----------------+-------+-------+----------+----------+
| | Long | Short | Long | Short |
+----------------+-------+-------+----------+----------+
| | Bonds | Bonds | Equities | Equities |
+----------------+-------+-------+----------+----------+
| United Kingdom | 1% | 0% | 1% | -2% |
+----------------+-------+-------+----------+----------+
| United States | 6% | 0% | 7% | 0% |
+----------------+-------+-------+----------+----------+
| Germany | 0% | 0% | -2% | 0% |
+----------------+-------+-------+----------+----------+
| France | 0% | -1% | 0% | 0% |
+----------------+-------+-------+----------+----------+
| Australia | 3% | 0% | 0% | 0% |
+----------------+-------+-------+----------+----------+
| Japan | 0% | -3% | 0% | 0% |
+----------------+-------+-------+----------+----------+
| Total | 10% | -4% | 6% | -2% |
+----------------+-------+-------+----------+----------+
Top Ten Long Positions as a Percentage of Total Assets*
Company Country of Listing % of Total Assets
S&P 500 Futures Sept 12 United States 6.5
Altria 9.95% 10/11/2038 United States 5.7
Australia (Commonwealth of) 5.75% 15/5/2021 Australia 1.7
Barclays Bank 14% Var Sub Perp United Kingdom 1.2
Australia (Commonwealth of) Australia 1.0
5. 5% 21/04/2023
ETFS Metal Physical Gold Stock United Kingdom 0.9
Datawind United Kingdom 0.5
Altria 9.25% 06/08/2019 United States 0.4
Bank of China (Beijing) Hong Kong 0.3
Select Sector SPDR Trust United States 0.3
18.5
*Some of this exposure is through derivatives. Exposure to other UK listed
investment companies is nil.
Comparative Performance to 31 July 2012
+-------------------------+-----+-----+-----+-------------+--------------+
| | One|Three| One| Last| Since|
+-------------------------+-----+-----+-----+-------------+--------------+
| |Month|Month| Year|Annual Report|Reconstruction|
| | | | | | (3 Nov 2009)|
+-------------------------+-----+-----+-----+-------------+--------------+
| | %| %| %| %| %|
+-------------------------+-----+-----+-----+-------------+--------------+
|Total Assets* | 1.3| 1.2| 3.4| 5.3| 11.6|
+-------------------------+-----+-----+-----+-------------+--------------+
|Benchmark** | 0.1| 0.2| 1.0| 0.8| 2.1|
+-------------------------+-----+-----+-----+-------------+--------------+
|Geared Growth Share NAV | 2.6| 0.2|(2.3)| 5.6| 0.5|
+-------------------------+-----+-----+-----+-------------+--------------+
|Geared Growth Share Price| 0.7| 5.8| 2.3| (6.5)| (15.0)|
+-------------------------+-----+-----+-----+-------------+--------------+
Sources
* Jupiter Asset Management Limited ("Jupiter")
** The Company's benchmark index is 3 month sterling LIBOR calculated as at the
first business day of each calendar month.
Availability of Monthly Fact Sheets
Monthly fact sheets for the Company are available for download from
www.jupiteronline.co.uk and by post or fax on request from the company
secretarial department.
The Company's Geared Growth shares are listed on the London Stock Exchange and
the prices are published in the Financial Times under `Investment Companies'.
The Net Asset Values of the Company's Geared Growth shares are calculated weekly
and can be viewed on the London Stock Exchange website at
www.londonstockexchange.com (under the heading 'Market News').
INVESTMENT OBJECTIVE
The objective of the Company is to achieve absolute returns. The Company aims to
provide Geared Ordinary shareholders with capital growth, with income as a
secondary objective, and to provide New Zero Dividend Preference shareholders
with a predetermined final capital entitlement on the Winding-Up Date.
INVESTMENT POLICY
The investment policy of the Company is to invest in listed equities and equity
related securities (such as contracts for difference, convertible securities,
preference shares, convertible unsecured loan stock, warrants and other similar
securities).
The Investment Manager ('Jupiter Asset Management Limited') is not limited in
the asset allocation of the Company's investment portfolio between sectors,
geographic regions or the types of equities and equity related securities in
which the Company may invest, but instead the Investment Manager considers each
potential investment on its own merits. The Investment Manager focuses on the
sectors that it considers to be the most undervalued areas of the market from
time to time and the allocation of assets between different sectors will be
determined by the Investment Manager in his absolute discretion.
In addition to equities, and equity related securities (including derivatives),
the types of investment and assets in which the property of the Company may be
invested include cash, near cash, fixed interest securities, currency exchange
transactions, index linked securities, money market instruments (MMIs) and
deposits.
These instruments may be used for the purposes of both efficient portfolio
management and, where it is considered to be appropriate for investment purposes
by the Investment Manager and the Board, to adopt an investment strategy aimed
at achieving positive returns across market cycles with low levels of
volatility. This strategy will seek to take advantage of specific macroeconomic
circumstances and market pricing anomalies.
At times the portfolio may be concentrated in any one or a combination of such
assets and as well as holding physical long positions the Investment Manager may
create synthetic long and short positions through the use of equity related
securities.
The Investment Manager will seek to limit volatility through diversified
portfolio holdings and sector exposures, active management of the Company's net
and gross portfolio exposure to the market, and through the use of derivatives.
The Company's investment portfolio is focused on companies where, in the opinion
of the Investment Manager, valuations are low and growth in earnings or assets
is not fully appreciated. The Investment Manager seeks to identify companies
within growth industries which enjoy certain key characteristics, including an
imaginative, proven and incentivised management team and balance sheet strength.
The Company manages an adequate spread of investment risk, with no one
investment making up more than 15 per cent. of the Total Assets of the Company
at the time of investment.
The Board has not set an objective of a specific Portfolio Yield for the Company
and the level of such yield is expected to vary with the sectors and
geographical regions to which the Company's portfolio is exposed at any given
time. However, substantially all distributable revenues that are generated from
the Company's investment portfolio are expected to be paid out in the form of
annual dividends.
It is the Company's stated policy that not more than 10 per cent., in aggregate,
of Total Assets may be invested in other UK listed investment companies unless
such companies have stated investment policies to invest no more than 15 per
cent. of their Total Assets in other UK listed investment companies (including
listed investment trusts).
The Company may make use of short-term borrowings such as an overdraft facility
for liquidity and investment purposes in order to gear the returns on the
Company's investment portfolio but in any event borrowings will not exceed, at
any one time, 25 per cent. of Total Assets without shareholder approval by
ordinary resolution.
The Company may also hedge currency exposures and unlisted securities (up to a
maximum of 5 per cent. of Total Assets).
Any material change in the investment policy of the Company described above may
only be made with the approval of Shareholders by an ordinary resolution and the
separate class approval of Geared Ordinary Shareholders.
For further information, please contact:
Richard Pavry
Director of Investment Trusts
Jupiter Asset Management Limited
rpavry@jupiter-group.co.uk
020 7314 4822
Jenny Thompson
Company Secretarial Department
Jupiter Asset Management Limited
jthompson@jupiter-group.co.uk
020 7314 5565
The Company's Registered office is at 1 Grosvenor Place, London SW1X 7JJ.
This interim management statement has been prepared solely to provide
information to meet the requirements of the UK Listing Authority's Disclosure
and Transparency Rules.
Jupiter Asset Management Limited
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Jupiter Second Split Trust PLC via Thomson Reuters ONE
[HUG#1640493]
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