Juno Selection Fund: Q2 2019
Over 25% Performance over First Half of 2019
The Hague – July 2019 – The Juno Selection Fund has ended the second quarter of 2019 with a positive result of 2.8%. The value of a participation in the Juno Selection Fund has achieved a level of €386.66 as of June 30, 2019, an increase of 25.4% since the beginning of the year.
Since its inception in January 2008, the fund has now generated a CAGR of +12.5% per annum (total return + 287%). The Juno Selection Fund demonstrates a clear outperformance compared to the market in general. Since January 2008, the Dutch AEX, dividends reinvested, has achieved a CAGR of +4.6% per annum. The EMIX Smaller Europe Index increased by +5.7% per annum over the same period.
Our investment style is based on a highly concentrated portfolio of European (family-owned) companies, combined with a proven and rigorously applied valuation methodology. For years in a row, the group of companies selected by Juno show an annual earnings growth of 10-15% in aggregate. This earnings growth has been the driver behind the attractive share price performance we have achieved.
“Within the stock market we are increasingly seeing two extremes: good, but more cyclical companies with less predictable earnings growth that are trading at, what appear to be very attractive price-earnings ratios. On the other hand the proven, predictable growers, which are often trading at very high multiples, sometimes too high.”
Frans Jurgens, director and co-founder of Juno: “The current negative interest rate on European bonds should have led to astronomical price-earnings ratios for equities, if the historical inverse correlation between these two would be our guiding light. Instead, within the stock market we are increasingly seeing two extremes: good, but more cyclical companies with less predictable earnings growth that are trading at, what appear to be very attractive price-earnings ratios. On the other hand the proven, predictable growers, which are often trading at very high multiples, sometimes too high.”
Lennart Smits, director and co-founder of Juno: “It remains of great importance that we continue to apply our strict discipline in the valuation of our companies. Future earnings growth is essential, but not paying too much for that future earnings stream is probably just as important. Even though we have reduced some positions due to too high valuations, we still have enough attractively priced, annually growing companies in the portfolio. Companies that we expect to continue to be able to increase their earnings by 10% to 15% annually. We therefore look to the future with great confidence.”
Currently, the five largest holdings in the Juno Selection Fund are: SimCorp, Grenke, Technogym, Paradox and CTS Eventim.
About Juno Investment Partners
Juno Investment Partners was established in 2007 as a fully independent fund manager and has an AIFM license (as referred to in Section 2:65 of the Wft), issued by the Dutch regulator AFM. Juno specializes in the selection of exceptional listed (family owned) companies in Europe. Companies that are able to achieve predictable and stable earnings growth year after year are considered for investment. The selection process focuses on the return on invested capital, a low debt ratio and free cash flows of a highly predictable nature. The analysts/portfolio managers compile a highly concentrated portfolio of approximately fifteen companies that they identify, analyze and visit regularly. Selected companies remain in the portfolio for a longer time period (usually more than five years). All analysts/portfolio managers have themselves invested in the Juno funds.
Juno offers three products: The Juno Selection Fund, which focuses on the selection of smaller and medium-sized listed companies, the Juno Continuation Fund for medium-sized companies and individual asset management using the same investment style, for larger clients through managed segregated accounts.
– The Juno Selection Fund was launched in 2008. This mutual fund invests in distinctive European small and medium-sized companies with an initial market capitalization of €250 million to €4 billion. In recent years, this investment style has resulted in above average investment returns for participants in the Juno Selection Fund. This fund has been hard closed for further (follow on) subscriptions since 2018.
– The same investment strategy is applied in the Juno Continuation Fund, which was launched on February 1, 2020. This fund focuses on unique, medium-sized European companies with a market value between €4 billion and €20 billion at the time of initial purchase. As is the case with the Selection Fund, the Continuation Fund also has a strong preference for investments in businesses that are family owned, or companies in which a family or management itself is also a shareholder.
