Juno Selection Fund achieves Q1 return of close to 10%
– Underlying companies continue to perform well
– Total return since inception* of +257 %; well ahead of market indices and industry peers
– No rapid increase in interest rates expected, despite market turmoil.
Wassenaar – May 2018 – The Juno Selection Fund, specialized in investments in European small and medium-sized (family-owned) companies, ended the first quarter of 2018 with an excellent result and achieved a +9.7% return. The Euromoney Smaller Company Index decreased by -3.1%, while the Dutch AEX index fell by -2.4%.
The Juno Selection Fund celebrated its 10th anniversary on January 11 and achieved an CAGR of 13.3% per annum during that period. Due to the strong inflow of capital, as well as the good performance, assets under management have increased sharply over the past years. That is why the fund has been closed to new participants since June 2017.
Juno has a consistent investment strategy that adheres to a strict selection policy resulting in a highly concentrated portfolio of strongly managed predominantly family-owned companies. An important factor that is considered when deciding if a company can be part of the Juno portfolio is whether the company can grow its profits year on year in a reasonably predictable fashion. In addition, consistent application of the valuation method has also been indispensable for the performance. Juno aims for the underlying companies to increase aggregate earnings within a bandwidth of 10-15% per annum.
• Q1 2018 Performance: +9.7%
• Performance over past 5 years: 114%
• 10-year CAGR since inception: 13,3%
• AUM of the fund: circa 300 million euros**
In the past quarter, Juno added two new companies to the portfolio. In February Juno took position in Technogym, an Italian producer of premium fitness equipment. The company went public in 2016 whereby founder and CEO Nerio Alessandri held on to his shares and still owns a 51.7% stake in the company. The fitness equipment market is growing rapidly and additionally the company is expanding its market share in the United States.
Another new name is Paradox Interactive, developer and publisher of computer games. The Swedish company, founded in 1999, has been successful as a developer of strategy games with a historical perspective for use on the PC. Founder Frederik Wester still owns 33.4% of the shares. The games are known for their depth and challenge and are very popular within a niche of the gaming public. Well-known titles are, for example, Europa Universalis IV, where players take command of a country in early modern times and Hearts of Iron IV, where one can do the same in the time of the Second World War. Both games have sold in excess of a million copies.
Frans Jurgens, director and co-founder of Juno: “Despite periodic attention to rising interest rates, we currently see very little of it. The interest rates on government bonds remain around 0.5%. It is clear that interest rates will normalize over time. However, we believe that the current low levels can be sustained for a long time, despite initial signs of tightening of the labor market, often a good indication of rising inflation.”
Lennart Smits, director and co-founder of Juno: “Continually low interest rates combined with our prudent expectations for future earnings growth keep us optimistic for both the short and longer term and we look forward to the next decade with great confidence.”
The five largest portfolio companies in the Juno Selection Fund are* the following: SimCorp, Grenke, Sartorius, Brembo and Stratec.
* As per March 30, 2018
** In total, Juno Investment Partners manages approximately 450 million euros in this strategy, spread over the Juno Selection Fund and through direct mandates from institutional clients.
About Juno Investment Partners and the Juno Selection Fund
Juno invests in unique European small- and mid-cap companies. For the most part, these are family-owned companies, or companies where a family or management is also a shareholder. Companies that can continue to achieve predictable and stable profit growth, year after year, are considered for investment. During this selection process, the emphasis lies on return on invested capital and free cash flows that are highly predictable in nature. Our analysts / asset managers put together a highly concentrated portfolio of companies that they themselves have identified, analysed and visit frequently. These companies often remain in the portfolio for a long period of time (on average more than three years). With this investment style, Juno has achieved consistent superior investment results for its clients during the past years. The Juno Selection Fund is managed by Juno Investment Partners. Juno Investment Partners has an AFM licence for discretionary asset management for direct mandates.
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