A fully flexible way to invest
3 minute read
At any point in time, there are always parts of the market that are out of favour. And buying into this space, when nobody else is, can feel uncomfortable. But, for a long term investor, it can be a fruitful place to find good quality companies.
Who's it for? All investors
There are many factors that move the share prices of companies. Company-specific factors, such as sales, revenue, profits and margins are the obvious ones. But there are many more factors, a lot of which cannot always be measured by a specific number or formula. One of these is investor sentiment. Investor sentiment is the general ‘feeling’ of the market. It describes the overall attitude of investors towards a particular company or the market as a whole.
When sentiment is positive, it typically means that money is flowing into the market or flowing into the shares of those companies that investors are positive on. This can result in share prices rising. But this can lead to investors getting carried away with themselves, as emotions start to drive markets, rather than fundamentals. As a result, share prices can become expensive, as investors flock towards particular parts of the market.
When investors turn negative, their emotions can drive share prices down quite excessively. We see this from time to time, when markets can suddenly plummet because investors suddenly feel worried about factors such as inflation, interest rates or the fear of trade wars. When it comes to individual companies, investors can simply avoid investing because they don’t like them, even if those companies are still delivering strong earnings and profits.
This has been notable over the last few years, where positive investor sentiment has driven the share prices of technology companies up, while many other parts of the market have been left behind simply because they have been ‘out of favour’. And there is money to be made by identifying these companies.
The manager of the Jupiter UK Alpha Fund believes it is possible to make money out of those companies where negative investor sentiment has driven their share prices down. The belief is that if you can buy shares in companies that are out of favour, and own them patiently for a long period of time, it is possible to achieve superior investment returns. The rationale is that investor sentiment will one day turn positive on these companies, so long as the companies are good quality businesses.
The Jupiter UK Alpha Fund is managed by Richard Buxton, an experienced investor with 35 years’ experience, backed up and supported by a strong team of investment analysts at Jupiter. Buxton believes that it is possible to deliver superior investment returns by investing in a portfolio of carefully identified companies that are simply out of favour. But the most difficult part of the process is to hold these companies patently for a very long period of time. Buxton has managed to perfect this process.
And while no one knows where markets are heading from here, this could be a fund worth considering if you are thinking of investing in something ‘contrarian’. In addition to the Jupiter UK Alpha Fund, there are also eight more actively managed funds on the Barclays Funds List that focus on the UK. Find out more information on these funds.
Correct at the time of publishing.
To diversify your investment, you may like to consider our own Barclays Ready-made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These Barclays multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.
Past performance of the fund and its manager are not a reliable indicator of their future performance.
We don’t offer personal investment advice so if you’re unsure you should seek that independently.
Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.
These are our current opinions but the future, as ever, is uncertain and outcomes may differ.
Read the Assessment of Value report [PDF, 3.2MB] for funds run by Barclays.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.
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