Juno Selection Fund: Q2 2020
Investment Style Juno is also successful in economic headwinds
Juno Selection Fund ends in the green after the first six months
- Juno Selection Fund achieves positive result in first half year, despite crisis
- Manager intervenes “unusually hard” in portfolio
- Equity positions that may emerge more strongly from the pandemic crisis have been increased
- Underlying investments are expected to achieve solid earnings growth again in 2020
The Hague – July 2020 – During the second quarter, the Juno Selection Fund was able to fully make up for the losses of the first three months of the year. With a return of +19.8% over the three months to July, the fund shows a positive performance of +0.8% for the full year 2020, despite the COVID 19- pandemic. Juno’s investment style appears to be successful even in an economic headwind.
The fund’s return continues to be well ahead of European equity markets, which are more heavily affected by the current economic conditions. After six months, the AEX (with reinvested dividend) stands at a loss of -6.3% for 2020, while the index of small to medium-sized European companies, the EMIX Smaller Europe, has even lost -14.5% since the beginning of the year.
“Due to the strict selection, our portfolio is clearly more resistant to economically uncertain times.”
Lennart Smits, director and co-founder of Juno: “We saw in the news that almost all companies that filed for bankruptcy in recent months had large amounts of debt on their balance sheets. Juno has always had very strict selection criteria for the companies it includes in their portfolios. One of those criteria is that these companies should be barely, if at all, burdened with debt capital, because in our view this always has an important risk-increasing effect. Due to the strict selection, our portfolio is clearly more resistant to economically uncertain times, especially in combination with the predictable earnings growth of these companies, another important criterion. ”
Juno also has a strong preference for family-owned businesses, one of the reasons being their prudent management style with a genuine focus on the long term. It is especially in times of economic challenges that Juno sets itself apart from the market. The Juno Selection Fund’s investment style has proven very successful since its inception in January 2008. In total, the fund generated an average of +12.1% per annum. The aforementioned EMIX Smaller Europe index for small and medium-sized European companies shows a return of +4.8% over the same period (since 2008).
Frans Jurgens, director and co-founder of Juno: “Obviously, not all of Juno’s companies are immune to the problems caused by the lockdown and economic uncertainty that ensues. At the beginning of the year, we had therefore already intervened unusually hard in the portfolio. Investments in companies that, in our opinion, would emerge well or even stronger from the pandemic crisis were strengthened. We also see that our financially strong (family-owned) companies are using the current situation to further expand their strong market positions. Looking at our selection of companies in the portfolio, we expect 2020 to be another year of generating attractive earnings growth. We know from the past that in the long term we will see this earnings growth reflected in higher share prices ”.
The manager of the Juno Selection Fund continues to patiently and closely monitor the markets and companies in order to be able to use the available cash position carefully at the right time.
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.