Investment objective

The investment objective of the Neptune Income Fund is to generate income with the potential for long-term (5 years or more) capital growth.

Strategy

The Fund invests in a concentrated portfolio of 20-40 companies selected using a combination of economic, industry and stock specific analysis.

Ongoing charge (%) 0.81
Net yield (%) -
Minimum investment
Initial 250,000
Top up -
Regular -
Share class codes
ISIN GB00B8JCR452
Bloomberg CFNINCA:LN
SEDOL B8JCR45

Fund managers

Robin Geffen

Fund Manager

James O'Connor

Assistant Manager
  • Role at Neptune

    Assistant Fund Manager

  • Time at Neptune

    3 years

  • Research focus

    Industrials and Materials

Clare Pleydell-Bouverie

Assistant Manager
  • Role at Neptune

    Assistant Manager

  • Time at Neptune

    <1 year

  • Research focus

    Consumer

Storm Uru

Assistant Manager
  • Role at Neptune

    Fund Manager

  • Time at Neptune

    4 years

  • Research focus

    Industrials

George Boyd-Bowman

Assistant Manager
  • Role at Neptune

    Assistant Manager

  • Time at Neptune

    8 years

  • Research focus

    Financials

James Dowey

Assistant Manager
  • Role at Neptune

    Fund Manager, Chief Economist and CIO

  • Time at Neptune

    12 years

Performance

Cumulative performance (%)

1 mth 1 mth YTD 1 yr 3 yrs 5 yrs 10 yrs 15 yrs Launch
Fund 1.0 14.1 7.7 35.3 53.7 151.6 240.0 339.0
Benchmark 2.0 15.2 1.3 27.0 38.9 151.1 221.9 293.9
IA sector 1.3 12.3 -1.8 18.3 32.0 146.6 192.3 265.1
IA rank 53/87 31/86 1/85 2/78 2/74 26/59 9/38 4/33
Quartile 3 2 1 1 1 2 1 1
Large chart

Calendar year performance (%)

2014 2015 2016 2017 2018
Fund 2.0 6.3 14.5 11.6 -3.4
Benchmark 1.2 1.0 16.8 13.1 -9.5
IA sector 3.6 6.6 9.2 11.7 -10.6
IA rank 54/75 37/75 9/78 41/80 4/85
Quartile 3 2 1 3 1

Performance data supplied by Morningstar; C Accumulation share class performance, in sterling with net income reinvested and no initial charges. Launch date used is 31/12/2002, 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 31/12/2002 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 UK Equity Income and the benchmark is FTSE All-Share 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.

FTSE International Limited ("FTSE") © FTSE 2019. FTSE® is a trade mark of the London Stock Exchange Group companies and is used by FTSE under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE's express written consent.

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 2.0 6.3 14.5 11.6 -3.4
Benchmark 1.2 1.0 16.8 13.1 -9.5
IA sector 3.6 6.6 9.2 11.7 -10.6
IA rank 54/75 37/75 9/78 41/80 4/85
Quartile 3 2 1 3 1

Performance data supplied by Morningstar; C Accumulation share class performance, in sterling with net income reinvested and no initial charges. Launch date used is 31/12/2002, 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 31/12/2002 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 UK Equity Income and the benchmark is FTSE All-Share 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.

FTSE International Limited ("FTSE") © FTSE 2019. FTSE® is a trade mark of the London Stock Exchange Group companies and is used by FTSE under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE's express written consent.

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.

Income

Income distribution

XD dates Pay dates Distribution rates* (pence per share)
01 Apr 19 31 May 19 1.1019
01 Jan 19 28 Feb 19 1.9118

*Rates paid per share for the C income shares, the primary distributing share class. For rates on other share classes, please contact us.
Please note, as of 2 January 2019, the Fund pays quarterly income distributions in Feb, May, Aug and Nov.

Net yield

C Inc GBP 2.84%
A Inc GBP 2.82%

Yields quoted for the income share classes, the primary distributing share classes. For yields on other share classes, please contact us.

Dividend risk

Yield from top 10 holdings in portfolio 29.1%

The higher the percentage, the more the fund relies on a smaller number of stocks to generate dividend income. This may make a fund's dividend yield more vulnerable. The lower the percentage, the greater the number of stocks contributing to the fund's overall dividend yield, representing a lower level of dividend risk.

Dividend cover

Average weighted dividend cover of the top 10 equity holdings in the portfolio 1.9
Average weighted dividend cover of the equity holdings in the portfolio 2.3

Dividend cover is the ratio of a company’s profits to the amount of dividend it pays to shareholders. A dividend cover of 2 times means the company’s profits are twice the amount being paid as a dividend, whilst a company with a dividend cover of 1 times is paying out a dividend equal to all of its net profits. Typically, the higher the dividend cover, the safer the company’s dividend payout.

Past performance is not a reliable indicator of future returns. You should not make any assumptions on the future on the basis of performance information. The value of an investment and the income from it can fall as well as rise as a result of market fluctuations and you may not get back the amount originally invested.

Portfolio

Data as at 31/07/2019

Top ten holdings (%)

FundIndex
Rio Tinto 3.49 2.20
BP 3.31 4.62
AstraZeneca  3.28 3.94
BAE Systems 3.23 0.75
Compass Group 3.23 1.40
Diageo 3.22 3.42
Ferguson 3.14 0.61
GlaxoSmithKline 3.12 3.55
Microsoft 3.10 0.00
Smiths Group 3.07 0.28

Sector (%)

FundIndex
Financials 29.5 23.0
Information technology 19.8 1.8
Materials 14.9 9.5
Industrials 9.5 11.2
Consumer staples 9.2 13.5
Healthcare 6.4 9.1
Energy 6.3 14.1
Consumer discretionary 3.2 7.9
Alternatives 1.0 0.0
Communication services 0.0 4.9
Utilities 0.0 2.7
Cash 0.2000 0.0

Top ten holdings (%)

FundIndex
Rio Tinto 3.49 2.20
BP 3.31 4.62
AstraZeneca  3.28 3.94
BAE Systems 3.23 0.75
Compass Group 3.23 1.40
Diageo 3.22 3.42
Ferguson 3.14 0.61
GlaxoSmithKline 3.12 3.55
Microsoft 3.10 0.00
Smiths Group 3.07 0.28

Sector (%)

FundIndex
Financials 29.5 23.0
Information technology 19.8 1.8
Materials 14.9 9.5
Industrials 9.5 11.2
Consumer staples 9.2 13.5
Healthcare 6.4 9.1
Energy 6.3 14.1
Consumer discretionary 3.2 7.9
Alternatives 1.0 0.0
Communication services 0.0 4.9
Utilities 0.0 2.7
Cash 0.2000 0.0

    Active share

    Active share 63.5%

    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 33

    Total number of holdings, excluding cash positions.

    Quarterly commentary

    Q2 2019

    Market Overview

    It was a volatile quarter for UK equities, with markets initially rallying strongly in April, but falling through the month of May. Initially, UK equities, like the rest of the world, rallied as a result of optimism surrounding US/China trade negotiations, improving Chinese economic data and more dovish rhetoric from the US Federal Reserve. However, this all changed in May, as Donald Trump re-imposed $200bn of tariffs on Chinese goods causing volatility to spike across global markets. In the UK, Theresa May announced her resignation as Prime Minister and the EU and (ongoing) Conservative Party leadership elections created further uncertainty regarding Brexit. The pound fell 2.3% versus the dollar over the quarter, which in turn aided the FTSE 100 Index’s outperformance versus the more domestically-orientated FTSE 250 Index. From an income perspective, Vodafone announced it would slash its dividend by 40%, raising questions over the sustainability of other popularly-held stocks payouts.

    Portfolio attribution

    The Fund’s outperformance over the quarter was driven by a combination of asset allocation and stock selection, while the Fund’s international bias (both in terms of our non-UK stocks and bias towards overseas earners) was beneficial given sterling weakness. Firstly, the Fund benefited from its 0% exposure to classic defensives such as the utilities, tobacco and telecoms sector (not holding Vodafone was particularly additive from a relative perspective), as well as its 0% to real estate and other domestic cyclicals. Our overall exposure to materials did detract from returns, however, with the likes of our mining stocks coming under pressure as a result of the reescalation in the US/China trade war. At the margin, the Fund’s exposure to exchange traded put options did detract from returns, but helped limit the overall portfolio drawdown in May.

    The major contributors to the Fund’s relative returns were our technology-related holdings as well as selected financials. Despite the volatility, the technology sector continued to deliver strong returns with the likes of Halma and Sage Group in the UK and Microsoft and Motorola in US all among our strongest contributors. Within financials, we benefited from not owning UK-domestic banks, which were hit by continued political uncertainty. Instead, we saw positive contribution from the likes of 3i Group and Aberdeen Standard, which both rallied over the quarter following their good updates to the market.

    Outlook

    Despite the re-escalation in the US/China trade war, we remain optimistic in our outlook for the global economy and continue to manage the portfolio with a clear international tilt. While Brexit uncertainty will continue to be a source of volatility, especially given the upcoming Tory leadership contest, our concerns surrounding the UK primarily stem from more structural issues facing the economy. These include slowing productivity growth and the polarisation of productivity growth, with only a small proportion of UK firms able to keep up with global peers in this regard.

    Robin Geffen

    Fund Manager

    The Fund’s outperformance over the quarter was driven by a combination of asset allocation and stock selection, while the Fund’s international bias was beneficial given sterling weakness

    Related event

    Prices

    Choose date
    Share class Price Change (%) Date
    C Acc GBP 174.20 0.40 20/08/2019
    C Inc GBP 130.30 0.46 20/08/2019
    A Acc GBP 397.90 0.40 20/08/2019
    A Inc GBP 181.10 0.44 20/08/2019
    B Inc GBP 193.50 0.42 20/08/2019

    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

    Factsheet
    31/07/2019
    Quarterly Commentary
    30/06/2019
    Key Investor Information Document
    07/08/2019

    Codes & fees

    ISIN SEDOL Bloomberg Ongoing charge (%)
    C Acc GBP GB00B8JCR452 B8JCR45 CFNINCA:LN 0.81
    C Inc GBP GB00B8L7B355 B8L7B35 CFNINCI:LN 0.81
    A Acc GBP GB0032315516 3231551 CFNINAA:LN 1.67
    A Inc GBP GB0032325093 3232509 CFNINAI:LN 1.67
    B Inc GBP GB0032325101 3232510 CFNINBI:LN 1.17

    Contact us

    UK Sales Team

    Michael Parsons

    Global Head of Sales

    Tel: 020 3249 0181

    Mob: 07870 510 306

    Email: michael.parsons

    Harry Bush

    Head of London Sales

    Tel: 020 3249 0174

    Mob: 07850 770 470

    Email: harry.bush

    Hugo Morrissey

    Sales Manager – North & Scotland

    Mob: 07850 770 453

    Email: hugo.morrissey

    Harry Nolan

    Sales Manager – London & South East

    Tel: 020 3249 0192

    Mob: 07970 231 379

    Email: harry.nolan

    To place a deal or request information on investments:

    Lines are open on weekdays from 9am to 5pm UK time. All 0800 numbers are free of charge to call from fixed line and mobile phones.

    Postal address

    Neptune Investment Management

    PO Box 9004

    Chelmsford

    Essex CM99 2WR