Overview

The Neptune China Fund offers exposure to one of the world’s leading economies. The Fund Manager uses Neptune’s in-house research to identify industry sectors which they believe have significant exposure to both domestic and international growth themes. These include continuing economic restructuring, substantial infrastructure development and the rising economic might of the ever-expanding Chinese middle class.

Investment objective

To provide capital growth by investing mainly in Chinese companies, selected at the manager's discretion.

There is no assurance that the investment objective will be achieved.

Ongoing charge (%) 1.06
Minimum investment
Initial 250,000
Top up -
Regular -
Share class codes
ISIN GB00B5Q38588
Bloomberg NECHCAC:LN
SEDOL B5Q3858

Fund managers

Ruth Chambers

Fund Manager
  • Role at Neptune

    Fund Manager

  • Time at Neptune

    3 years

  • Research focus

    Energy and Utilities

Ewan Thompson

Assistant Manager
  • Role at Neptune

    Investment Director, Head of Emerging Market Equities

  • Time at Neptune

    12 years

  • Research focus

    Metals and Mining

Performance

Cumulative performance (%)

1 mth 1 mth YTD 1 yr 3 yrs 5 yrs 10 yrs Launch
Fund 6.7 6.7 -12.6 59.4 48.1 174.7 334.6
Benchmark 7.5 7.5 -13.3 74.0 88.6 200.2 556.4
IA sector 5.8 5.8 -13.3 63.0 71.7 200.8 408.1
IA rank 13/36 13/36 15/36 24/35 30/33 13/19 10/12
Quartile 2 2 2 3 4 3 4
Large chart

Calendar year performance (%)

2014 2015 2016 2017 2018
Fund -3.8 -0.2 18.1 33.1 -14.6
Benchmark 15.0 -2.3 20.6 41.0 -13.7
IA sector 11.2 2.8 19.6 35.8 -14.3
IA rank 33/33 25/33 22/35 25/35 17/36
Quartile 4 3 3 3 2

Performance data supplied by Morningstar; C Accumulation share class performance, in sterling with net income reinvested and no initial charges. Launch date used is 31/12/2004, which is the launch of the A Accumulation share class. The C Accumulation share class was launched on 03/10/2012, so during the period from 31/12/2004 to 03/10/2012 the performance record is based on the pre-existing A Accumulation share class. Reported date prices used for cumulative and discrete performance tables. The performance of other share classes may differ.

IA sector rankings may change at any time as a result of closure, movement between sectors or price amendments by competitor funds. The Fund's IA sector is IA China / Greater China and the benchmark is MSCI China Index. Neptune’s funds are not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason, the comparison index should be used for reference only.

This Fund may have a high historic volatility rating and past performance is not a guide to future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations and you and your clients may not get back the original amount invested. Investments in emerging markets may be higher risk and more volatile than investments in developed markets.

FE Crown Fund Rating applies to C Accumulation share class in pound sterling. FE Crown Fund Ratings do not constitute investment advice offered by FE and should not be used as the sole basis for making any investment decision. ©2019 FE. All rights reserved.

Calendar year performance (%)

2014 2015 2016 2017 2018
Fund -3.8 -0.2 18.1 33.1 -14.6
Benchmark 15.0 -2.3 20.6 41.0 -13.7
IA sector 11.2 2.8 19.6 35.8 -14.3
IA rank 33/33 25/33 22/35 25/35 17/36
Quartile 4 3 3 3 2

Performance data supplied by Morningstar; C Accumulation share class performance, in sterling with net income reinvested and no initial charges. Launch date used is 31/12/2004, which is the launch of the A Accumulation share class. The C Accumulation share class was launched on 03/10/2012, so during the period from 31/12/2004 to 03/10/2012 the performance record is based on the pre-existing A Accumulation share class. Reported date prices used for cumulative and discrete performance tables. The performance of other share classes may differ.

IA sector rankings may change at any time as a result of closure, movement between sectors or price amendments by competitor funds. The Fund's IA sector is IA China / Greater China and the benchmark is MSCI China Index. Neptune’s funds are not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason, the comparison index should be used for reference only.

This Fund may have a high historic volatility rating and past performance is not a guide to future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations and you and your clients may not get back the original amount invested. Investments in emerging markets may be higher risk and more volatile than investments in developed markets.

FE Crown Fund Rating applies to C Accumulation share class in pound sterling. FE Crown Fund Ratings do not constitute investment advice offered by FE and should not be used as the sole basis for making any investment decision. ©2019 FE. All rights reserved.

Portfolio

Data as at 31/01/2019

Top ten holdings (%)

FundIndex
Alibaba Group 10.02 13.45
Tencent 9.48 15.52
China Construction Bank 7.09 5.29
China Mobile 5.08 3.97
Ping An Insurance Group 4.75 3.11
Industrial & Commercial Bank of China 4.69 3.30
Bank of China 3.62 2.26
Baidu.com 3.26 2.96
China Overseas 2.95 0.89
Everbright International 2.67 0.21

Sector (%)

FundIndex
Financials 24.1 22.9
Consumer discretionary 20.1 21.4
Communication services 19.4 27.0
Industrials 7.8 5.2
Energy 5.9 5.1
Consumer staples 5.0 2.4
Utilities 4.5 2.8
Real estate 4.1 5.7
Information technology 3.7 2.5
Materials 2.5 2.0
Healthcare 2.1 2.9
Cash 0.8000 0.0

Top ten holdings (%)

FundIndex
Alibaba Group 10.02 13.45
Tencent 9.48 15.52
China Construction Bank 7.09 5.29
China Mobile 5.08 3.97
Ping An Insurance Group 4.75 3.11
Industrial & Commercial Bank of China 4.69 3.30
Bank of China 3.62 2.26
Baidu.com 3.26 2.96
China Overseas 2.95 0.89
Everbright International 2.67 0.21

Sector (%)

FundIndex
Financials 24.1 22.9
Consumer discretionary 20.1 21.4
Communication services 19.4 27.0
Industrials 7.8 5.2
Energy 5.9 5.1
Consumer staples 5.0 2.4
Utilities 4.5 2.8
Real estate 4.1 5.7
Information technology 3.7 2.5
Materials 2.5 2.0
Healthcare 2.1 2.9
Cash 0.8000 0.0

    Active share

    Active share 44.9%

    The Active Share is a measure of how different a portfolio is from its benchmark, i.e. how 'actively managed' a fund is relative to its respective Index. A score of 100% indicates the fund's holdings are completely different, whilst 0% indicates the portfolio exactly replicates the Index.

    Number of holdings

    No. of holdings 42

    Total number of holdings, excluding cash positions.

    Quarterly commentary

    Q4 2018

    Market overview

    The trade dispute between the US and China was at the centre of market concerns during the quarter and continued to affect investment sentiment. This was particularly felt in the US where performance lagged the Chinese benchmark, with the S&P 500 returning -11.45%, potentially providing President Trump with further incentive to negotiate a deal with China. Progress was made towards the end of the quarter as the trade dispute deescalated and a tariff truce was agreed, allowing negotiations to take place. First indications reveal that negotiations have so far been productive, with news that China has agreed to reduce the trade deficit and address intellectual property concerns.

    Fund attribution

    The Neptune China Fund returned -9.8% in the quarter ahead of the IA China peer group average of -10.1%. Negative performance came partly from the healthcare sector, which was hit by regulation, as well as energy stocks, which were impacted by the falling oil price after President Trump unexpectedly reversed his stance on exemptions on Iranian sanctions. The Fund partly offset this with stock selection in the industrials sector; we have positioned to increase exposure to municipal infrastructure spending, which has benefited from the government’s stimulus efforts. Our focus on the theme of growing health awareness of the Chinese consumer also continued to play out with sportswear companies also outperforming the benchmark. We have increased our positioning in the industrials sector, as we believe more proactive fiscal policy will result in government support for infrastructure investment growth. This increase was funded by a reduction in exposure to the materials sector, which we believe will start to see a reduction in demand over the course of 2019. We maintain exposure to gas supply names in line with China’s long-term policy to move away from coal and towards gas as a fuel source and, in line with increased consumer health awareness in China, we added a nutrition and care products company to the portfolio, which we believe has very strong long-term growth potential.

    Outlook

    The deadline for tariff negotiations is at the beginning of March, so far trade talks appear to be productive with an agreement likely. Both sides have incentives to negotiate a deal and China has already highlighted a list of trade actions it is willing to take. Meanwhile, the Chinese government has enacted and announced numerous stimulus policies including reductions in the reserve requirement ratio for banks and tax reductions for corporations and consumers. While a large-scale stimulus seems unlikely due to the ongoing deleveraging campaign, we believe that there will be ongoing targeted stimulus to help private companies, reduce the tariff burden on exports and boost consumer spending. We believe this should go a long way to offsetting the effects of the trade war and maintain stability in the economy.

    Ruth Chambers

    Fund Manager

    Our focus on the theme of growing health awareness of the Chinese consumer also continued to play out with sportswear companies also outperforming the benchmark

    Insights & analysis

    Prices

    Choose date
    Share class Price Change (%) Date
    C Acc GBP 176.50 -1.89 15/02/2019
    A Acc GBP 422.20 -1.91 15/02/2019

    Neptune funds are priced every working day at 12 noon UK time and prices should be updated here by 6pm the same day.

    The prices shown should be taken only as an indication of the value of shares. Prices are set on a forward-pricing basis which means that any instruction to buy or sell shares will be fulfilled at the price set at 12 noon the next day.

    If you are looking for historical prices of closed funds or share classes, or are having any difficulty finding the price information you require, please call our customer services team on 0800 587 5051.

    Literature

    Codes & fees

    ISIN SEDOL Bloomberg Ongoing charge (%)
    C Acc GBP GB00B5Q38588 B5Q3858 NECHCAC:LN 1.06
    A Acc GBP GB00B04H0Y06 B04H0Y0 CFNCHAA:LN 2.06

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