Neptune Russia Special Situations Fund
The Neptune Russia Special Situations Fund is designed to offer investors a diversified exposure to the Russian economy through a portfolio primarily focused on medium-sized companies. The fund manager focuses on identifying companies that we believe are misunderstood and consequently are significantly undervalued by the market. The Fund also has the flexibility to invest in larger stocks where we believe a valuation opportunity lies.

Lead Manager

Robin founded Neptune Investment Management in May 2002 and is the architect of Neptune's global sector investment approach. He graduated from Oxford in 1979 and began his investment career at Charterhouse J Rothschild before moving onto Eagle Star, York Trust plc and then Scottish Equitable, where he set up their pooled fund business. Robin joined Orbitex Investments Limited as Chief Investment Officer in 1997 and was most recently Global CIO – Pensions, before founding Neptune.

Co-Fund Manager

Thomas joined Neptune in July 2009 as an Investment Analyst, having graduated from Oxford University with a masters degree in Chemistry. He became a Fund Manager in July 2011 and undertakes global research on the oil & gas sector. Thomas is also a CFA charterholder.
 
 
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FUND LITERATURE
The value of an investment and any income from it can fall as well as rise and you may not get back the original amount invested. This Fund may invest more than 35% in government and public securities in a number of jurisdictions. All applications are made on the basis of the Key Investor Information Document, Supplementary Information Document, Prospectus, most recent annual or semi-annual report and the Application Form, which can be downloaded above. Please read these carefully prior to investing. If you are unsure about the suitability of an investment please consult an authorised financial adviser. Potential investors in emerging markets should be aware that investment in these markets can involve a higher degree of risk.
Lead ManagerRobin Geffen
Co-Fund ManagerThomas Smith
Launch date20/12/2012
Fund size£1.9m
IMA sectorSpecialist
BenchmarkMSCI Russia 10-40
 
11735
CUMULATIVE PERFORMANCE
 1 Year3 Year5 YearSince Launch
Fund (%)-11.26N/AN/A-8.15
Index (%)-10.95N/AN/A-14.41
IMA Sector Average (%)-1.25N/AN/A4.88
Sector Ranking115/139N/AN/A111/133
Quartile Ranking4N/AN/A4
Data as at 31.05.2014. Source: Lipper, C Acc Share Class, GBP1
DISCRETE PERFORMANCE
 31/05/1331/05/1231/05/1131/05/1031/05/09
 31/05/1431/05/1331/05/1231/05/1131/05/10
Fund (%)-11.26N/AN/AN/AN/A
Index (%)-10.95N/AN/AN/AN/A
IMA Sector Average (%)-1.25N/AN/AN/AN/A
Sector Ranking115/139N/AN/AN/AN/A
Quartile Ranking4N/AN/AN/AN/A
Data as at 31.05.2014. Source: Lipper, C Acc Share Class, GBP1
 
 
 
Lead ManagerRobin Geffen
Co-Fund ManagerThomas Smith
Launch date20/12/2012
Fund size£1.9m
IMA sectorSpecialist
BenchmarkMSCI Russia 10-40
 
The first quarter of 2014 was a volatile one for Russian markets. Having been relatively resilient among emerging markets during 2013 due to robust macroeconomic fundamentals, rising tensions with Ukraine weighed on the market during January and February before Russian military exercises caused a major sell-off in early March. The MSCI Russia 10-40 Index bottomed immediately prior to the Crimean referendum, before rallying as Western sanctions were more political than economic in nature and Putin stressed that he had no intention of splitting up Ukraine. Against this background, the Index finished the quarter with a loss of -16.01%.*
The current situation remains tense, although we believe that with Putin having achieved his goal of annexing Crimea to Russia there is little incentive for Russia to retaliate with aggressive sanctions of its own against the West. Further, without military action in Eastern Ukraine there will be limited need for more severe sanctions against Russia.
However, recent developments have impacted the Russian economy. In an attempt to prevent capital flight, the central bank hiked rates by 1.5% to 7%, and the weaker ruble is adding to inflationary pressures. It now looks likely that the Russian economy will grow less this year than in 2013, at below 1%.
In this environment, we have increased our weighting in the materials and energy sectors as both are exposed to more robust external demand while also being key beneficiaries of the weaker currency. Within the domestic sectors, we have retained holdings where we see a secular tailwind. We have also maintained our zero weighting in banks as these are most vulnerable to a downturn in the economy. Infrastructure continues to be a key priority for the Russian government and we continue to hold a number of stocks in the industrials sector.
The Neptune Russia Special Situations Fund’s focus on small and mid-cap stocks results in more of a domestic bias to the portfolio. Domestically-oriented stocks have been hit harder in the market downturn and as such the Fund underperformed the MSCI Russia 10-40 Index during the first quarter, falling by -24.65%.*
While the risk premium in the Russian market has increased, we believe that valuations at less than 0.6x price to book – which are back at global financial crisis lows – are excessively depressed, providing opportunities for the longer term. However, we would expect volatility to persist while the current tensions remain, at least until after the Ukrainian elections in May.
 
*Performance data supplied by Lipper; A Accumulation share class performance, in sterling with net income reinvested and no initial charges. The performance of other share classes may differ. IMA sector averages and rankings may change at any time as a result of closure, movement between sectors or price amendments by competitor funds. Where references to specific securities are made, they are for illustrative purposes only and should not be regarded as recommendations to buy or sell these securities.
This Fund may be higher risk than other funds and past performance is not a guide for 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 may not get back the original amount invested. Investing in emerging markets can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK and do not have the strict standards of accounting and transparency present in developed markets. Some emerging markets may have relatively unstable governments, economies based on only a few industries and markets that trade only a limited number of securities. As a consequence, both the value of investments made and the ease of which the underlying securities can be bought and sold may be adversely affected. Exposure to a single market increases potential volatility. Retail clients, if necessary, should consult an investment adviser or authorised intermediary.
Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this update is deemed to be impartial research. Any forecasts on the page are indicative and are not guaranteed. We do not undertake to advise you as to any change of our views. This is not a solicitation or an offer to buy or sell. All information and advice is given in good faith but without any warranty.
SECTOR ALLOCATION (%) as at 30/04/2014
Materials19.2
 
Energy18.7
 
Consumer Discretionary10.7
 
Telecommunication10.4
 
Information Technology10.0
 
Consumer Staples9.3
 
Industrials8.3
 
Cash7.7
 
Financials4.8
 
Health Care0.9
 
Source: Neptune
 

The market commentaries found on this page relate to regions which this Fund may invest in. For quarterly commentary that relates directly to this Fund please click here.

 
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    2-043
    FUND LITERATURE

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