Neptune UK higher income aims for income and growth by investing mainly in the UK, at least 20 per cent in UK fixed income securities and at least 20 per cent in UK equities. The fund is also allowed some overseas exposure and will comprise 40 to 60 holdings.
The Neptune US Income Fund also has 40 to 60 holdings. It aims to provide a rising income with the potential for growth by investing mainly in North American equities, including Canada. It can also invest in companies based elsewhere that derive significant profits or turnover from the USA and/or Canada.
Neptune has promoted two of its assistant fund managers to run the funds. UK higher income fund manager Emma Stanford joined Neptune in July 2007 as an investment analyst. She is also assistant fund manager on the Neptune income, Neptune quarterly income and Neptune UK equity funds.
US income fund manager Rebecca Young joined Neptune in April 2008 as an investment analyst. She is also assistant fund manager on the Neptune US opportunities and Neptune US max alpha funds.
Neptune believes that the new UK fund will appeal to investors looking for regular income given that interest rates are so low. It sees the US fund as a way of diversifying income away from the UK.
High-yielding US stocks may be seen as undervalued because their prices are low compared with their yields, which could benefit the Neptune fund particularly if the economic recovery pushes on. But Jupiter North American income and JPM US income could provide competition among investors looking for more established funds.
The UK higher income fund is also up against many established funds in the UK equity and bond income sector, including the Ecclesiastical higher income fund and Jupiter high income fund. However, Neptune’s reputation could win over prospective investors.