Overview

The Neptune US Income Fund is designed for investors seeking regular equity income and long-term growth from North America. Its income share classes pay distributions four times a year from a concentrated portfolio of US and Canadian stocks identified as being able to grow their dividends significantly. The Fund could be held as a more cautious alternative to traditional US growth funds or by investors who want to diversify their income sources outside the UK while retaining the potential for capital growth.

Investment objective

To provide a rising level of income with the potential for some capital growth also. The Fund invests mainly in North American companies, selected at the manager's discretion, which may include Canada as well as the USA.

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

Ongoing charge (%) 0.98
Net yield (%) -
Minimum investment
Initial 250,000
Top up -
Regular -
Share class codes
ISIN GB00B909H978
Bloomberg NEUSICA:LN
SEDOL B909H97

Fund managers

George Boyd-Bowman

Fund 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

Robin Geffen

Assistant Manager

Performance

Cumulative performance (%)

1 mth 1 mth YTD 1 yr 3 yrs 5 yrs Launch
Fund 2.2 9.0 16.0 49.2 101.4 199.9
Benchmark 4.1 11.1 17.9 61.3 114.7 258.8
IA sector 2.5 11.2 15.8 55.2 93.6 181.0
IA rank 93/153 124/153 71/148 89/134 48/117 57/70
Quartile 3 4 2 3 2 3
Large chart

Calendar year performance (%)

2014 2015 2016 2017 2018
Fund 18.4 7.4 33.4 8.4 -0.2
Benchmark 20.8 7.3 33.5 11.3 1.6
IA sector 16.4 3.4 28.8 9.5 -1.2
IA rank 36/111 18/118 25/116 69/112 53/111
Quartile 2 1 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 30/09/2010, which is the launch of the A Accumulation share class. The C Accumulation share class was launched on 07/05/2013, so during the period from 30/09/2010 to 07/05/2013 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 North America and the benchmark is S&P 500 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 18.4 7.4 33.4 8.4 -0.2
Benchmark 20.8 7.3 33.5 11.3 1.6
IA sector 16.4 3.4 28.8 9.5 -1.2
IA rank 36/111 18/118 25/116 69/112 53/111
Quartile 2 1 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 30/09/2010, which is the launch of the A Accumulation share class. The C Accumulation share class was launched on 07/05/2013, so during the period from 30/09/2010 to 07/05/2013 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 North America and the benchmark is S&P 500 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 31/03/2019

Top ten holdings (%)

FundIndex
Microsoft 3.49 3.83
Luxfer 2.53 0.00
Apple 2.44 3.60
Lamb Weston 2.32 0.05
Merck & Co 2.26 0.91
American Tower Corporation 2.22 0.37
Motorola Solutions 2.18 0.10
CMS Energy 2.14 0.07
Brink's 2.13 0.00
Abbott Laboratories  2.09 0.59

Sector (%)

FundIndex
Information technology 23.9 21.2
Industrials 15.8 9.5
Financials 12.8 12.7
Healthcare 12.7 14.6
Consumer staples 7.9 7.3
Consumer discretionary 7.4 10.1
Materials 4.8 2.6
Utilities 3.9 3.3
Energy 2.8 5.4
Real estate 2.2 3.1
Communication services 1.8 10.1
Cash 4.0000 0.0

Top ten holdings (%)

FundIndex
Microsoft 3.49 3.83
Luxfer 2.53 0.00
Apple 2.44 3.60
Lamb Weston 2.32 0.05
Merck & Co 2.26 0.91
American Tower Corporation 2.22 0.37
Motorola Solutions 2.18 0.10
CMS Energy 2.14 0.07
Brink's 2.13 0.00
Abbott Laboratories  2.09 0.59

Sector (%)

FundIndex
Information technology 23.9 21.2
Industrials 15.8 9.5
Financials 12.8 12.7
Healthcare 12.7 14.6
Consumer staples 7.9 7.3
Consumer discretionary 7.4 10.1
Materials 4.8 2.6
Utilities 3.9 3.3
Energy 2.8 5.4
Real estate 2.2 3.1
Communication services 1.8 10.1
Cash 4.0000 0.0

    Active share

    Active share 79.5%

    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 60

    Total number of holdings, excluding cash positions.

    Quarterly commentary

    Q4 2018

    Market overview

    The US equity market, having for most of the year eluded the growing fears that had afflicted other global stockmarkets, succumbed during the final quarter of 2018 and suffered a sharp correction. In addition to fears over the damage from the ongoing US-China trade spat, markets became concerned that the US economy was headed for tougher times. Further fuel to the sell-off was added by concerns that the Fed was going to continue to tighten monetary policy with more regular rate hikes in addition to continued shrinking of its QE-bloated balance sheet despite growing evidence that the economy was likely to head back towards trend growth in 2019. Confusion was added by the less than crystal clear guidance from current Fed Governor, Jerome Powell. These fears culminated in the weakest Christmas Eve since the Second World War and in the market’s eyes the so-called “Trump bump” was quickly becoming a “Trump slump”.

    The clear focus during the quarter was on wider macro events but in the background the market continued to deliver strong earnings growth. Earnings per share for the S&P 500 grew around 28% year-on-year in Q4 which, even when stripping out estimates of the tax cut (c.11% of the 28%), is clearly impressive. Earnings growth and multiple contraction meant that the S&P finished the year trading on 14x forward earnings having started the year north of 18x. The more defensive, less economically sensitive sectors, performed best during the period as would be expected in a quarter where the Index fell by c.13.5% in dollar terms. The energy sector was particularly weak thanks to the plunging oil price, which fell 38% to $45 a barrel, thanks to both concerns over slowing global, and in particular Chinese growth, and news in October that both Saudi Arabia and Russia had increased production.

    The seemingly rapidly changing global economic outlook and heightened level of geopolitical uncertainty continues, in our view, to support our strategy of not being aggressively overweight or underweight individual sectors. Instead, we look to deliver relative outperformance by finding companies within sectors that we feel can sustainably grow dividends ahead of the market and where we feel the market underappreciates this.

    Fund attribution

    Despite being down, in-line with the wider US peer group, importantly, we were slightly behind our US income peers. Having been ahead of the vast majority our US income peers in 2018, we gave back some of this performance in the fourth quarter. This is perhaps in keeping of the fact that generally those shares that had been strongest in the first nine months of the year were hit hardest in the last three.

    Individual stock selection drove the majority of relative performance but common factors that held us back during the quarter included our bias (certainly relative to peers) towards mid-cap stocks. The Russell 2000 significantly underperformed the S&P 500 during the sell-off. In addition, any stocks that were exposed to housing related end markets also experienced sharp corrections. We continue to believe that the many mid-cap stocks are better placed than their larger peers to embrace the new digital economy and the US housing market continues to have a decent outlook. We therefore expect to maintain this exposure.

    Stronger performers for the Fund during the quarter benefited from the market’s appraisal of their relative defensiveness rather than any fundamental improvement in their earnings or dividend power. Weaker performers included Coty, the cosmetics company, where the turnaround has been disappointing and led to the removal of both the CEO, Camillo Pane, and respected Chairman, Bart Becht.

    The Fund’s turnover was extremely low during the quarter and we remain focused on finding dividend stocks with latency potential and where we believe the outlook for dividend growth has room to improve in the medium term.

    George Boyd-Bowman

    Fund Manager

    We remain focused on finding dividend stocks with latency potential & where we believe the outlook for dividend growth has room to improve in the medium term

    Insights & analysis

    Prices

    Choose date
    Share class Price Change (%) Date
    C Acc GBP 216.80 0.14 18/04/2019
    C Inc GBP 187.80 0.16 18/04/2019

    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 GB00B909H978 B909H97 NEUSICA:LN 0.98
    C Inc GBP GB00B909HB91 B909HB9 NEUSICI:LN 0.98

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