Jupiter Merian Global Equity

Investment process

The fund’s philosophy is that markets are not fully efficient due to a number of investor behavioural and psychological biases. Following a purely quant-based systematic approach can exploit these errors and lead to outperformance over time.

The team also believe that investment styles are cyclical and seek to profit by forecasting which styles are most likely to perform in a particular market environment.

The team has a very large opportunity set of 6,000 global stocks. Although they remove illiquid stocks from their investment universe, the strategy does invest across the market-cap spectrum - although most exposure is to developed market large-caps.

Every stock in the universe is analysed across five stock selection criteria.

These are:

- dynamic valuations: measuring a stock’s quality versus its valuation
- sustainable growth: distinguishing between companies with sustainable growth versus one-hit wonders
- analyst sentiment: taking advantage of under or over-reaction from markets to an analysts’ forecast
- company management: how have they performed historically?
- price action: this covers several components at stock and sector level.

Once the stocks have been analysed across the five selection criteria, the next step is to understand which criteria are likely to outperform in the current market conditions. It is important to understand the market sentiment and uncertainty in different regions. Once the current position has been established, the model can look at history to give expectations for future risk and return.

The portfolio is then built from the stocks which maximise alpha within the funds set risk limits and controls.

The team are constantly tweaking and adding new ideas and data to improve their models. One thing which sets this fund apart is its relationship to academia. The team sponsor PHDs and work with academics to explore blue sky ideas.

The final portfolio is well diversified with 450-600 positions.