Overview

The Neptune Income Fund consists of a 33 equally-weighted stock portfolio with the aim of generating a yield in excess of the FTSE All-Share Index. Veteran income investor Robin Geffen has a strong focus on minimising dividend risk by maintaining a diversified portfolio, guarding against an overreliance on particular stocks. The Fund invests predominantly in UK companies but has the ability to invest up to 20% in income opportunities overseas.

Investment objective

To provide a rising level of income with the potential for some capital growth also. The Fund invests mainly in UK companies’ shares and fixed interest stocks (so called because they have a set interest rate), although it also invests overseas. The manager takes a high conviction approach, leading to a focused portfolio of 30-40 holdings that have been selected at their discretion.

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

Ongoing charge (%) 0.86
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

George Boyd-Bowman

Assistant Manager
  • Role at Neptune

    Investment Director, Head of US Equities

  • Time at Neptune

    8 years

  • Research focus

    Financials

Storm Uru

Assistant Manager
  • Role at Neptune

    Fund Manager

  • Time at Neptune

    4 years

  • Research focus

    Industrials

James O'Connor

Assistant Manager
  • Role at Neptune

    Assistant Fund Manager

  • Time at Neptune

    3 years

  • Research focus

    Industrials and Materials

Performance

Cumulative performance (%)

1 mth 1 mth YTD 1 yr 3 yrs 5 yrs 10 yrs 15 yrs Launch
Fund 1.1 1.1 -2.1 31.3 42.2 142.3 210.0 289.0
Benchmark 4.2 4.2 -3.8 28.5 31.2 163.7 197.2 256.1
IA sector 5.0 5.0 -5.1 19.0 27.8 157.5 180.9 241.3
IA rank 89/90 89/90 15/88 7/82 4/77 38/54 10/38 9/35
Quartile 4 4 1 1 1 3 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 3.5 6.5 9.1 11.6 -10.5
IA rank 56/77 38/77 9/82 44/84 4/88
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.

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 3.5 6.5 9.1 11.6 -10.5
IA rank 56/77 38/77 9/82 44/84 4/88
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.

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
Anglo American 3.27 0.88
Rio Tinto 3.23 2.17
Johnson Matthey 3.20 0.26
Glencore Xstrata 3.19 1.62
3i Group 3.17 0.00
Diageo 3.14 3.21
Antofagasta 3.13 0.14
Sage Group 3.12 0.31
Halma 3.11 0.24
Micro Focus 3.08 0.28

Sector (%)

FundIndex
Financials 26.1 23.5
Materials 24.7 9.7
Information technology 21.1 1.6
Consumer staples 8.9 13.4
Energy 6.1 14.2
Alternatives 3.7 0.0
Industrials 3.2 11.0
Consumer discretionary 3.0 8.0
Healthcare 2.9 8.0
Communication services 0.0 4.9
Utilities 0.0 3.1
Cash 0.3000 0.0

Top ten holdings (%)

FundIndex
Anglo American 3.27 0.88
Rio Tinto 3.23 2.17
Johnson Matthey 3.20 0.26
Glencore Xstrata 3.19 1.62
3i Group 3.17 0.00
Diageo 3.14 3.21
Antofagasta 3.13 0.14
Sage Group 3.12 0.31
Halma 3.11 0.24
Micro Focus 3.08 0.28

Sector (%)

FundIndex
Financials 26.1 23.5
Materials 24.7 9.7
Information technology 21.1 1.6
Consumer staples 8.9 13.4
Energy 6.1 14.2
Alternatives 3.7 0.0
Industrials 3.2 11.0
Consumer discretionary 3.0 8.0
Healthcare 2.9 8.0
Communication services 0.0 4.9
Utilities 0.0 3.1
Cash 0.3000 0.0

    Active share

    Active share 67.6%

    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

    Q4 2018

    Market overview

    It was a painful quarter for equities, with a variety of macroeconomic headwinds hurting investor sentiment and contributing to the UK market’s worst annual performance since 2008. These included higher interest rates in the US, slowing global economic growth, a fall in the oil price, continued tensions between the US and China over trade, the government shut down in the US and, of course, Brexit-related uncertainty. Over the period, the FTSE All Share Index posted a loss of -10.3% in total return terms – its second worst quarterly performance in over a decade. There were very few places for UK investors to hide during the sell-off, making the relative performance of the Neptune Income Fund all the more pleasing.

    Portfolio positioning

    There were numerous drivers behind the Fund’s strong relative returns. First and foremost, the Fund’s large-cap bias was additive, given UK small and mid-caps bore the brunt of the sell-off. The largest contributors to the Fund’s returns, however, were its exchange traded options. We added this exposure to the portfolio in 2017 in order to achieve our objective of delivering attractive income but also protecting capital during periods of volatility. Other positive contributors included CME Group, the futures exchange and one of our overseas holdings, which benefited from the more volatile conditions. Our stock selection within consumer staples, particularly our 0% tobacco weighting as well as exposure to Diageo and Unilever, also aided the Fund’s relative returns. The main detractors to the Fund’s performance were Apple, which fell on the back of weaker Chinese data, as well as certain financials and materials holdings, such as SunTrust Bank, HSBC, Victrex and DS Smith.

    Outlook

    While Brexit uncertainty will continue to be a source of volatility, 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. Furthermore, a decade of ultra-loose monetary policy from the Bank of England has masked falling levels of productivity, which has kept a large number of “zombie” companies afloat. As such, we continue to have an overseas bias within the Fund, both in terms of direct holdings (we maintain our 20% weighting to the US) and our focus on international earners within the UK market - just 11% of the underlying revenue within the portfolio derives from the UK. Though there are fears surrounding global economic growth, we do not believe the US is heading towards recession in 2019 and we expect Chinese growth to improve in the second half of the year as the authorities’ monetary and fiscal loosening begin to take effect.

    Robin Geffen

    Fund Manager

    There were very few places for UK investors to hide during the selloff, making the relative performance of the Neptune Income Fund all the more pleasing

    Insights & analysis

    Prices

    Choose date
    Share class Price Change (%) Date
    C Acc GBP 164.50 -0.24 15/02/2019
    C Inc GBP 125.80 -0.24 15/02/2019
    A Acc GBP 377.40 -0.24 15/02/2019
    A Inc GBP 175.70 -0.17 15/02/2019
    B Inc GBP 187.20 -0.21 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 GB00B8JCR452 B8JCR45 CFNINCA:LN 0.86
    C Inc GBP GB00B8L7B355 B8L7B35 CFNINCI:LN 0.86
    A Acc GBP GB0032315516 3231551 CFNINAA:LN 1.71
    A Inc GBP GB0032325093 3232509 CFNINAI:LN 1.71
    B Inc GBP GB0032325101 3232510 CFNINBI:LN 1.21

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