Robin Geffen has spoken out against the inclusion of the Neptune income fundin Principal Investment Management’s “grey list” study of UK equity income funds.
The managing director and chief executive officer of Neptune, and manager of the Neptune income fund, defended the fund’s performance.
In the latest UK equity income study of funds, known as the white list, the Neptune income fund remained on Principal’s ’grey list’ of funds which it considers that investors should consider switching out of.
The Principal report stated: “Geffen’s focus on global growth is unlikely to be shared by other investors, as in these austere times, the risk probably lies with a growth disappointment rather than surprise so, with this in mind, we feel investors should monitor any holding carefully.”
Responding to this, Geffen (pictured) says in 2011 the fund returned a yield of 5 per cent, which is higher than the IMA requirement of 110 per cent FTSE All-Share yield of 3.9 per cent and the peer group average.
“Furthermore, 30 out of the 33 stocks held by the fund increased their dividend, with impressive growth seen from Compass (up 37.7 per cent), Rio Tinto (up 26.7 per cent) and Legal & General (up 25.1 per cent),” says Geffen.
In terms of performance, Geffen notes 2011 was the first and only calendar year that the Neptune Income fund has not been first or second quartile since its launch in 2002. Over five years to the end of December, the fund is ranked 30 out of 78, having returned 2.35 per cent versus the sector average fall of 2.61 per cent.
Geffen says: “Looking ahead, we anticipate our current portfolio of stocks to continue growing their dividend and remain committed to only holding stocks that will make a contribution to the portfolio’s overall yield.
“The current disposition of the Neptune income fund is based on our in-house view that emerging markets will drive over two thirds of global GDP growth in the long-term.”
He says: “In order to benefit from this, the fund continues to maintain a bias to UK-listed companies with international exposure which have the ability to pay solid growing dividends.
“We also have the ability to invest 20 per cent of the portfolio in international stocks and have identified six companies which have far more attractive fundamentals than their UK peers.”
Geffen adds: “We believe that dividends will form an important component of total return in 2012 and we will continue to ensure that every stock in the fund contributes to income.
“Although, the basic materials sector hampered the fund’s performance in the short-term, we remain confident in its ability to enhance dividend payments and tap into the fast-growing emerging markets.”
Principal Investment Management has published its biannual white list, adding four new funds to the “black list”.