Overview

The Neptune Emerging Markets Fund gives investors exposure to the fast growth potential of the world’s emerging economies. Fund Manager Ewan Thompson is able to tap into the best investment opportunities from across the emerging markets globally, to build a diversified portfolio. The Fund aims to provide capital growth, with the potential for some income, by investing in a diverse selection of stocks.

Investment objective

To provide capital growth, with the potential for some income, by investing mainly in companies based in emerging markets worldwide, selected at the manager's discretion.

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

Ongoing charge (%) 0.90**
Minimum investment
Initial 250,000
Top up -
Regular -
Share class codes
ISIN GB00B8J6SV12
Bloomberg NEPEMCA:LN
SEDOL B8J6SV1

Fund managers

Ewan Thompson

Fund Manager
  • Role at Neptune

    Investment Director, Co-Head of Emerging Market Equities

  • Time at Neptune

    12 years

  • Research focus

    Metals and Mining

Thomas Smith

Assistant Manager
  • Role at Neptune

    Investment Director, Co-Head of Emerging Market Equities

  • Time at Neptune

    9 years

  • Research focus

    Energy and Utilities

Ruth Chambers

Assistant Manager
  • Role at Neptune

    Fund Manager

  • Time at Neptune

    3 years

  • Research focus

    Energy and Utilities

Robin Geffen

Assistant Manager

Performance

Cumulative performance (%)

1 mth 1 mth YTD 1 yr 3 yrs 5 yrs 10 yrs Launch
Fund -3.32 -11.07 -9.56 51.96 49.08 164.76 127.51
Benchmark -6.82 -10.48 -8.74 47.72 33.11 178.23 122.97
IA sector -6.28 -12.75 -11.07 41.09 26.98 158.69 112.64
IA rank 8/102 33/99 38/98 19/93 9/82 19/37 14/37
Quartile 1 2 2 1 1 2 2
Large chart

Calendar year performance (%)

2013 2014 2015 2016 2017
Fund -4.47 0.76 1.10 29.19 27.56
Benchmark -4.08 4.29 -9.65 33.12 25.83
IA sector -2.52 4.24 -8.95 32.35 24.67
IA rank 48/76 70/84 1/89 64/93 34/97
Quartile 3 4 1 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 30/09/2008, 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 30/09/2008 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 Global Emerging Markets and the benchmark is MSCI Emerging Markets 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. ©2018 FE. All rights reserved.

Calendar year performance (%)

2013 2014 2015 2016 2017
Fund -4.47 0.76 1.10 29.19 27.56
Benchmark -4.08 4.29 -9.65 33.12 25.83
IA sector -2.52 4.24 -8.95 32.35 24.67
IA rank 48/76 70/84 1/89 64/93 34/97
Quartile 3 4 1 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 30/09/2008, 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 30/09/2008 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 Global Emerging Markets and the benchmark is MSCI Emerging Markets 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. ©2018 FE. All rights reserved.

Portfolio

Data as at 31/10/2018

Top ten holdings (%)

FundIndex
Samsung Electronics 5.12 4.35
Novatek 4.72 0.33
Taiwan Semiconductor Manufacturing 4.48 3.94
Tencent 4.17 4.11
Alibaba Group 3.52 3.48
Rumo 3.41 0.10
Gazprom Neft 3.01 0.53
Lukoil  2.92 0.77
Itaú Unibanco 2.64 0.90
Credicorp 2.53 0.32

Sector (%)

FundIndex
Financials 28.8 24.5
Materials 15.6 7.8
Information technology 11.2 15.1
Energy 10.7 8.6
Consumer discretionary 8.7 10.2
Industrials 8.1 5.4
Communication services 7.6 13.4
Consumer staples 4.1 6.5
Healthcare 1.6 2.9
Utilities 0.8 2.6
Real estate 0.0 2.8
Cash 2.8 0.0

Country (%)

FundIndex
China & Hong Kong 25.2 30.1
Brazil 18.3 8.0
Russia 16.7 3.9
South Korea 10.0 13.9
India 6.9 8.7
South Africa 5.4 5.9
Taiwan 5.4 11.9
UK 3.3 0.0
Peru 2.5 0.4
Indonesia 2.1 2.1
Argentina 1.4 0.0
Cash 2.8 0.0

Top ten holdings (%)

FundIndex
Samsung Electronics 5.12 4.35
Novatek 4.72 0.33
Taiwan Semiconductor Manufacturing 4.48 3.94
Tencent 4.17 4.11
Alibaba Group 3.52 3.48
Rumo 3.41 0.10
Gazprom Neft 3.01 0.53
Lukoil  2.92 0.77
Itaú Unibanco 2.64 0.90
Credicorp 2.53 0.32

Sector (%)

FundIndex
Financials 28.8 24.5
Materials 15.6 7.8
Information technology 11.2 15.1
Energy 10.7 8.6
Consumer discretionary 8.7 10.2
Industrials 8.1 5.4
Communication services 7.6 13.4
Consumer staples 4.1 6.5
Healthcare 1.6 2.9
Utilities 0.8 2.6
Real estate 0.0 2.8
Cash 2.8 0.0

Country (%)

FundIndex
China & Hong Kong 25.2 30.1
Brazil 18.3 8.0
Russia 16.7 3.9
South Korea 10.0 13.9
India 6.9 8.7
South Africa 5.4 5.9
Taiwan 5.4 11.9
UK 3.3 0.0
Peru 2.5 0.4
Indonesia 2.1 2.1
Argentina 1.4 0.0
Cash 2.8 0.0

    Active share

    Active share 76.1%

    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 45

    Total number of holdings, excluding cash positions.

    Quarterly commentary

    Q3 2018

    Market overview

    The third quarter of 2018 saw a continuation of the broad sell-off that began in late January, with the MSCI Emerging Markets Index falling over 2% in US dollar terms. The continued strength of the dollar, alongside ongoing concerns over the impact of trade tariffs on global growth in general, and the Chinese economy in particular, contributed to general risk aversion in the direction of emerging markets. The chief drag on returns was China, where the market was led lower by the heavyweight IT stocks, where regulatory concerns surfaced. The other major casualty was Turkey, which has by far the weakest fundamentals across emerging markets and thus most at risk from a less benign global backdrop. On the positive side, higher oil prices saw the energy sector perform very well, and also those markets most closely linked to crude oil followed suit, with Russia performing strongly. Elsewhere, Latin America produced positive returns, led by Brazil where the better electoral prospects for Presidential candidate, Jair Bolsanaro, allowed markets to rally. Interestingly given the risk-off market sentiment, the better-performing sectors were those in more cyclical areas, such as energy, materials and industrials, whilst the weakest were consumer, healthcare and IT, which led to a notable improvement in ‘value’ shares relative to their ‘growth’ counterparts.

    Fund attribution

    Although the Fund performed well in July and September, August was a difficult month, leading to overall underperformance over the quarter. On an asset allocation basis, the Fund fared well, but (unusually) the hit to performance came from three stock specific issues. In India, Yes Bank fell sharply on the decision that the regulator would not renew the term of long-standing CEO Rana Kapoor. We decided to maintain our investment on valuation grounds and faith in the wider management team to continue growing the business. In our materials exposure, Kaz Minerals also fell considerably on news that they would be investing in a Russian mining project, thus complicating the investment case and cash flow story. In this instance, we agreed with the market’s negative reading and exited the position. In addition, China Maple Leaf – an education stock in China – suffered as a result of a change in regulation regarding for-profit schools operators in the sector. We are currently monitoring this position closely awaiting further clarifications as to the regulator’s intentions.

    Outlook

    We retain our positive outlook for emerging markets despite the recent volatility. We see relative valuations as extremely compelling – emerging markets trade at a nearly 40% discount, on price to book against developed markets – and are consistent with considerable potential outperformance in the following years. Whilst the stronger US dollar is indeed a headwind, we see a high degree of resilience in most emerging markets to withstand this effect. Moreover, we are currently witnessing a stabilisation of economic data, belying concerns that the trade war threats are hurting the growth outlook to a significant degree. We therefore maintain our positioning; favouring those stocks with attractive valuations that are geared into the long-term economic growth story presented by emerging markets, and are currently being overlooked by the market.

    Ewan Thompson

    Fund Manager

    Valuations in emerging markets remain extremely compelling and at levels historically associated with above average performance relative to developed markets

    Insights & analysis

    Prices

    Choose date
    Share class Price Change (%) Date
    C Acc GBP 152.50 -0.13 14/12/2018
    E Acc GBP 92.47 -0.10 14/12/2018

    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 GB00B8J6SV12 B8J6SV1 NEPEMCA:LN 0.90**
    E Acc GBP GB00BYWLCP75 BYWLCP7 NEPEMEG:LN 0.70

    *The OCF is capped at 0.90% as at 01/07/2018.

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