City shrinks but Jupiter goes red hot

THE CHIEF executive of Jupiter warned the financial services sector would continue to shrink as a proportion of Britain’s economy as the fund manager posted a jump in annual profits.

Edward Bonham Carter also said his sector has to work harder to give value for money as the City adjusts after a long period of growth before the crisis.

“I think we are still in the deleveraging cycle as we work off some of the excess – particularly high debt levels,” he told City A.M.

Jupiter has bolstered its balance sheet after a year of deleveraging and its net cash position, of £7.4m at 31 December, is the strongest in its history after nearly halving its debt position to £143m over the year.

The fund manager pulled in £700m of new money during the year, although assets under management dropped 5.4 per cent to £22.8bn as market movements hit its funds. Bonham Carter said markets are likely to remain volatile and fund flows “subdued”, echoing warnings of client “nervousness” made last week by the head of fund manager Henderson.

“It’s quite reasonable to expect a lag from retail investors before they get confidence into risk,” Bonham Carter said.

Pre-tax profit jumped 65.8 per cent to £70.3m. The firm will continue its European expansion, believing investors in Germany and France will want to own more equities.