The table below shows the retail funds with the largest holdings in Neptune Income.
| Fund | Holding in Neptune Income |
| Aberdeen Multi-Manager UK Income Portfolio |
15.8 |
| T.Bailey Equity Income |
11.4 |
| HSBC Income Fund of Funds |
11.03 |
| IFDS Brown Shipley Multi-Manager Income |
9.6 |
| HSBC Open Global Distribution |
9.59 |
The Neptune Income fund is managed by veteran equity income investor and Neptune founder Robin Geffen. The fund’s objective is to produce high income, increasing at least in line with inflation. The fund’s portfolio is constructed of exactly 33 equally weighted companies, all of which must contribute to the overall yield.
The fund is in the top quartile for 3-year performance and 2nd quartile for both one and 5-year performance.
Source: Financial Express Analytics
More importantly, however, is the fund’s income generating ability. In July this year the fund was ranked 1st for income generation over a 5 year period by Principal Investment Management. As companies struggle to maintain dividends, equity income funds have suffered but the Neptune Income fund has continued to provide investors with a good level of income. The fund distributes income twice a year and the most recent payment was a net yield of 5.5 per cent.
Assistant fund manager Mark Martin explains the fund’s current asset allocation: "The fund’s two biggest sector weightings are currently financials and consumer staples, which account for 20.6 per cent and 16.6 per cent of the portfolio respectively. In financials, we have taken a measured and risk averse approach, selecting quality stocks with limited exposure to toxic debt. In consumer staples we continue to focus on large multinational holdings."
He goes on to outline the fund management team’s outlook: "Looking to the remainder of the year, we believe that the market can continue to rise as valuations are still attractive, leading economic indicators continue to show signs of improvement and M&A activity is picking up. Focusing on genuine income-generating stocks, we are confident that Neptune’s rigorous sector and stock selection will see the fund maintain its strong track record in the latter half of 2009."
The funds with the greatest allocation to the Neptune Income fund come from a range of sectors: IMA Cautious Managed, IMA Balanced Managed, IMA UK Equity Income and IMA UK Equity Income and Growth.
With an average yield of 4 per cent, one year returns averaging just over 25 per cent and relatively low levels of volatility the five funds with the greatest allocation to the Neptune Income fund have served investors well in the last 12 months.
The overall performance of these funds has been boosted by the inclusion of the Neptune Income fund. The graph below shows how this fund has outperformed the four sectors listed above, over a five year period. In addition, the fund has also outperformed the same sectors over a one year period.
While there are equity income funds that have achieved better returns than the Neptune Income fund, the yields achieved beat the market. Robin Geffen’s ability to generate consistently high levels of income when dividends in much of the market are drying up is what has drawn multi-managers to this fund.