Juno Selection Fund “pandemic necessitates portfolio review”
The Hague – April 2020 – The Juno Selection Fund ended the first quarter of 2020 with a net asset value of €346.90 per participation, a decrease of -15.9% since the end of last year. Whereas the fund, which specializes in investments in European small and medium-sized (family-owned) companies, ended 2019 with an excellent result of +33.8%, it now also has to face the consequences of the COVID-19 virus.
Over the past quarter, the EMIX Smaller Europe Index lost -27.7% and the AEX (dividend reinvested) also fell sharply by -19.8%. Since its inception in January 2008, the Juno Selection Fund has shown an average performance of +10.7% net per annum. This means that the fund is still well ahead of the EMIX Smaller Europe Index, which achieved a compound annual net result of +3.5% over the same period.
The pandemic that is currently gripping the world has forced Juno’s portfolio managers to intervene rigorously in the portfolio in February and March. Frans Jurgens, director and co-founder of Juno: “It is not our expertise to make macroeconomic forecasts, but we strongly believe that once we put this pandemic behind us, it will leave us with a very deep scar in the economy. In our opinion, demand for services and products will not suddenly bounce back and we must also consider the very large government deficits and resulting tax measures. With that scenario in mind, we have concluded that some Juno companies are now suddenly lacking their usual predictable earnings growth, a cornerstone of our investment policy. We have rigorously reduced or completely sold those positions. Fortunately, there are also companies that are barely affected and even a few that will take advantage of the current circumstances. We were able to act on share price weakness and selectively increase the holding of those companies in our portfolio”.
Lennart Smits, director and co-founder of Juno: “The timely switch in the portfolio to cash has certainly helped us in this past period. But especially the low dependency on economic cycles, a core selection criterion at Juno, makes our companies less vulnerable. We also benefited from the healthy financial structures of our companies: where cash on the balance sheet still cost money a few months ago and caused derision from bankers, our (family-owned) companies now hold the trump cards. Juno will try to continue to make smart, selective and disciplined use of the high volatility in the markets to get the cash we hold in the portfolio today back to work”.
About the Juno Selection Fund and Juno Investment Partners
The Juno Selection Fund invests in shares of extraordinary European small and medium-sized companies with an initial market value between 250 million and 4 billion. Often these are family-owned businesses or companies where a family or management itself is also a main shareholder. Companies that can continue to achieve predictable and stable earnings growth year after year are considered for investment. The selection process focuses on the return on invested capital, low debt levels and free cash flows with a highly predictable character. Our analysts / portfolio managers put together a highly concentrated portfolio of companies that they themselves identify, analyze and regularly visit. Selected companies often stay in the portfolio for a longer period (frequently well over five years). With this investment style, participants of the Juno Selection Fund have achieved a superior investment result in recent years.
The Juno Selection Fund is managed by Juno Investment Partners. Juno Investment Partners has an AIFM license (as referred to in article 2:65 Wft), granted by the Dutch Financial Markets Authority (“AFM”). Juno Investment Partners is also the manager of the Juno Continuation Fund that was launched on 1 February 2020. With the same investment style, the Continuation Fund focuses on listed (family-owned) companies with a market value that is higher than the focus of the Selection Fund (respectively 4 – 20 billion euros, versus 250 million – 4 billion euros).
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