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 (%) 1.00
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

Nick Williams

Assistant Fund Manager
  • Role at Neptune

    Assistant Fund Manager

  • Time at Neptune

    3 years

  • Research focus

    Healthcare and Chemicals

Performance

Cumulative performance (%)

1 mth 1 mth YTD 1 yr 3 yrs 5 yrs Launch
Fund -5.28 7.83 10.35 60.29 102.43 197.30
Benchmark -4.92 9.05 11.56 67.64 115.15 246.89
IA sector -6.09 6.35 8.69 56.49 91.52 171.76
IA rank 55/148 42/144 48/144 47/129 37/110 50/59
Quartile 2 2 2 2 2 3
Large chart

Calendar year performance (%)

2013 2014 2015 2016 2017
Fund 24.69 18.40 7.41 33.36 8.38
Benchmark 29.93 20.76 7.26 33.55 11.28
IA sector 29.75 16.40 3.44 28.84 9.50
IA rank 84/100 36/111 18/118 25/116 69/112
Quartile 4 2 1 1 3

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.

Calendar year performance (%)

2013 2014 2015 2016 2017
Fund 24.69 18.40 7.41 33.36 8.38
Benchmark 29.93 20.76 7.26 33.55 11.28
IA sector 29.75 16.40 3.44 28.84 9.50
IA rank 84/100 36/111 18/118 25/116 69/112
Quartile 4 2 1 1 3

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.

Portfolio

Data as at 31/10/2018

Top ten holdings (%)

FundIndex
Microsoft 3.36 3.57
Apple 2.99 4.38
Lamb Weston 2.61 0.00
Medifast 2.51 0.00
Luxfer 2.32 0.00
MSA Safety 2.19 0.00
Service Corporation International 2.19 0.00
Merck & Co 2.16 0.85
Medtronic 2.16 0.00
Pfizer 2.12 1.10

Sector (%)

FundIndex
Information technology 24.1 20.7
Industrials 15.9 9.3
Financials 14.9 13.6
Healthcare 10.5 15.0
Consumer staples 8.7 7.4
Consumer discretionary 7.8 9.8
Materials 5.1 2.6
Utilities 3.7 3.1
Energy 3.5 5.7
Real estate 2.0 2.8
Communication services 1.8 10.1
Cash 2 0.0

Top ten holdings (%)

FundIndex
Microsoft 3.36 3.57
Apple 2.99 4.38
Lamb Weston 2.61 0.00
Medifast 2.51 0.00
Luxfer 2.32 0.00
MSA Safety 2.19 0.00
Service Corporation International 2.19 0.00
Merck & Co 2.16 0.85
Medtronic 2.16 0.00
Pfizer 2.12 1.10

Sector (%)

FundIndex
Information technology 24.1 20.7
Industrials 15.9 9.3
Financials 14.9 13.6
Healthcare 10.5 15.0
Consumer staples 8.7 7.4
Consumer discretionary 7.8 9.8
Materials 5.1 2.6
Utilities 3.7 3.1
Energy 3.5 5.7
Real estate 2.0 2.8
Communication services 1.8 10.1
Cash 2 0.0

    Active share

    Active share 80.8%

    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 61

    Total number of holdings, excluding cash positions.

    Quarterly commentary

    Q3 2018

    Market overview

    Despite continuing fears around increased protectionism and trade wars, the US equity market was relative calm in the third quarter of the year. This was in stark contrast to other global markets where equities suffered. Dollar strength and other idiosyncratic factors led to a number of emerging market currencies suffering volatility. The continued strength in US earnings reported during the period helped support the US market. Earnings per share for the S&P 500 grew around 25% year-on-year, driven by 12% sales growth and the highest level of EPS surprises in 7 years. On the trade front, there was some good news later on in the quarter where a new NAFTA deal seems to have been agreed with Canada and Mexico. The risk is that this is seen as a trade “win” by President Trump and adds further grist to his mill in negotiating with China potentially adding further volatility to equity markets down the road.

    Fund attribution

    Sector wise, there were less obvious trends driving returns this quarter. Healthcare had a particularly strong quarter; medtech and equipment & services have been strong all year but were joined by large pharma, which gained attraction as a more defensive part of the market that is seen to be less at risk from digital disruption than some other sectors. Financials continued to underperform the market despite the 10-year bond yield rising towards the end of the period. The flattening yield curve has been a hindrance all year and investors, who are increasingly concerned about the length of this cycle, are weary of buying such an economically sensitive sector. This mixed picture, in our view, supports our strategy of not being aggressively overweight or underweight individual sectors. Instead, we look to deliver 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.

    This quarter, the Fund’s performance was slightly behind the S&P 500 Index but ahead of the wider IA North America sector and more importantly, ahead of both our more representative US Income peers and relevant US dividend indices. In general, income-dedicated strategies have struggled so far this year, in large part due to the persistent strength of software, a subsector of the technology sector, which yields little to nothing.

    Strong stock selection drove the outperformance this quarter. This came from a number of different sectors. Within Staples, Medifast, the weight-loss company, reported further confirmation that their strategic turnaround is starting to pay dividends. Blackstone had a good quarter; the backdrop for the largest private equity company continues to be favourable and speculation that the company could reconsider their corporate structure gained traction. KKR, a rival, converted from a limited partnership to a traditional C-corp earlier this year and has received a higher valuation as a result.

    The Fund’s turnover remained contained although we have continued to build a positions in a few companies. These have tended to be in the mid-cap space, where we are currently finding dividend stocks with more 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 look to deliver outperformance by finding companies within sectors that we feel can sustainably grow dividends ahead of the market

    Insights & analysis

    Prices

    Choose date
    Share class Price Change (%) Date
    C Acc GBP 207.50 0.44 14/12/2018
    C Inc GBP 181.70 0.44 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 GB00B909H978 B909H97 NEUSICA:LN 1.00
    C Inc GBP GB00B909HB91 B909HB9 NEUSICI:LN 0.99

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