A truly unique fund, Jupiter Gold & Silver invests in both physical gold and silver bullion, as well as gold and silver mining companies. Manager Ned Naylor-Leyland is a passionate advocate for his asset class and believes investors should strongly consider some gold and silver exposure for their portfolios.
Previously Merian Gold & Silver
Our opinion
We like this fund’s dynamism and the manager’s willingness to alter its positioning to best suit current market conditions. Most funds in its peer group are unable to own physical bullion, making this a very different proposition. We also applaud the scrutiny Ned applies to his holdings. The fund's ability to hold up to 70% in silver also offers the potential for higher returns, albeit whilst increasing the risk profile. Jupiter Gold & Silver’s returns have been volatile since launch, but its low correlation to other asset classes demonstrates its potential value in a diversified portfolio.
Company description
Founded in 1985, Jupiter Asset Management has grown from a specialist investment boutique to a global fund management company. It provides a range of products from bond and equity funds to multi-asset strategies for both retail and institutional clients. Jupiter is a strong proponent of active management and therefore gives its managers the freedom to run their funds their way, without having to adhere to a 'house' view. In July 2020, Jupiter completed its acquisition of Merian Global Investors.
Fund manager
Ned Naylor-Leyland joined the company in 2015 and has managed the Jupiter Gold & Silver fund since it launched. Ned graduated from the University of Bristol in 1998 and has previously worked for Smith & Williamson and Quilter Cheviot. He is a passionate advocate for his asset class and has almost two decades’ experience of precious metals investing. Ned is abely supported by fellow investment managers Chris Mahoney and Joe Lunn. Chris has been with the fund since its inception in 2016, having previously worked as a portfolio manager at Merian Global Investors. He holds a degree in management from the University of Leeds. Joe began his career as a mining engineer in the gold fields of Western Australia, and has 13 years experience as a mining analyst.
Ned Naylor-LeylandFund manager
Investment process
The fund's underlying philosophy is that gold is money: Ned believes gold and silver should be thought of as a currency, not a commodity. The fund combines physical gold and silver bullion with mining shares, which offer deep relative value. The fund’s neutral position is 50:50 gold/silver. Ned will dynamically move the portfolio between bullion and miners, depending on his macroeconomic view and valuations. In a more defensive scenario, the fund will own more bullion and more gold. In a more optimistic scenario (for gold and silver) the fund will have a much greater weight to miners and silver.
The fund is very sensitive to geopolitical risk and typically avoids mining companies which invest in dangerous parts of the world. Governance is critically important and the team prefers a concentrated portfolio of companies whose assets are in countries where society and politics are stable. Out of 200 equities, 80 make it into the investment universe, with 30 to 40 modelled in more detail.
Investments are typically held for the long term and the fund’s turnover is expected to be between 20 and 40% per annum.
The physical bullion in the portfolio is predominantly held through the Sprott Physical Gold Trust, Sprott Physical Silver Trust and the Sprott Physical Gold and Silver Trust. Ned and his team undertake a very high level of due diligence on the vehicles in which the fund’s physical bullion is held.
ESG
ESG - Limited
The highly specialised nature of this fund, and the asset class it invests in, mean that broad-ranging ESG issues are difficult to implement. Ned invests in physical materials, as well as mining companies which are traditionally viewed as ESG laggards. However, that is not to say the fund simply ignores ESG issues. Ned will only look to invest in mining companies operating at the highest level of social welfare. Governance is also of particular importance, especially focusing on the location and political background of where his constituent companies operate from. This includes looking at factors such as the custodial practices of those companies that store the physical commodities, again, with only those operating at the highest level accepted. However, due to the nature of the asset class in which the fund operates, it is still likely to have a challenged ESG profile.
Risk
Since its launch in March 2016, the fund has tended to have a greater weight to miners over bullion, and silver over gold. Both these factors have made the fund more volatile and increased risk. Since launch it has been almost three times as volatile as the UK stock market*. However, absolute performance has thus far been strong overall. At this stage we think it is too early to judge the fund on its risk-adjusted performance.
*Source: FE Analytics, Merian Gold & Silver R Acc GBP max drawdown and weekly volatility, 8 March 2016 to 8 October 2019.
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