Richard Smith, the manager of the Invesco Perpetual Smaller Companies Equity fund, added Jupiter to his portfolio at IPO and maintains a focus on companies able to withstand prolonged slow growth.
Against a falling market in the second quarter, his fund performed in line with the peer group average, buoyed by holdings including Synergy Health and Domino Printing.
By contrast, negative contributors to performance included veterinary services provider CVS Group, social housing services company Connaught and outsourcing firm Mouchel.
“CVS Group issued a profit warning, stating that like-for-like sales would be lower than expected in a difficult consumer environment,” says Smith.
“Connaught also issued a profit warning, while Mouchel suffered after announcing trading had become more difficult in the wake of the general election.”
Smith added Jupiter—a top five UK retail asset manager alongside Invesco Perpetual—citing its strong long-term performance track record and good recurring revenue profile. (article continues below)
“Our key observation about the UK economy remains that the process of deleveraging by banks and consumers will lead to a prolonged period of slow economic growth,” he says.
“Disposable income has benefited from lower interest rates and falling commodity prices but, in terms of consumer spending, the positive impact has been restrained by fears of rising unemployment and cuts in government spending to come.”
Against this backdrop, the group remains invested in quality companies that can outperform in the predicted long period of the slow growth.
“We continue to favour established and growing companies that, in recent months, have returned to more attractive relative valuations,” adds the manager.