Fitch lowered Jupiter’s rating outlook from “Stable” to “Negative” due to worries that Jupiter Fund Management is “increasingly exposed to net fund outflows” and further “market value changes.”
Also, the Jupiter’s long-term issuer default rating (IDR) was likewise lowered by the ratings agency, from BBB-down to BBB.
However, the market volatility this year has made it difficult for Jupiter to retain and attract investors’ attention. According to its half-yearly statistics, the AUM fell 19% to £49 billion, with £3.6 billion in net outflows.
These were at the time described by the CEO of the group as “disappointing,” and this downgrade simply puts the organization under additional strain.
Fitch Ratings also stated that despite the merger with Merian Global Investor last year increasing the AUM by £16.6 billion, Jupiter was now “materially smaller and more concentrated than higher-rated peers.”
Regarding the “rating sensitives,” Fitch officially explained “the inability to prevent net outflows over the next 12 months, particularly in regard to new strategies, or considerable erosion of Jupiter’s margins that affects our assessment of business profile.”
Jupiter’s “inability to execute new strategic objectives aimed at broadening the business model and expanding the institutional investor base” was another area of concern noted by Fitch.
According to Fitch, one of the goals of the deal was to “better diversify Jupiter’s strategy,” with a focus on the US, Chinese, and Australian markets.
Nevertheless, it claimed that as of FYE21, Jupiter’s AUM exposure to the UK and to equities remained concentrated at 71% and 55%, respectively.
“A large operational loss questioning the robustness of Jupiter’s risk-control architecture” served as a third motivating factor for this downgrading.
Fitch did note some positives, stressing its strategy goal to increase the institutional client base from its current 10% to 20% of AUM over the medium term.
