The Neptune Global Special Situations Fund (ISIN: GB00B29MXF68) specifically targets companies it believes are "misunderstood" by the market, and are consequently undervalued. However, over three and five years its performance has flopped, as highlighted by Bestinvest in its 'Spot the Dog' report, suggesting this strategy isn't paying off.
On a £100 investment, the fund produced returns of just £93 over three years, compared with 134 per cent from its benchmark, the MSCI World Index (to 22 July 2014). This makes it the worst performing Global fund over three years.
Over five years it has returned 128 per cent compared with 199 per cent from its benchmark over the same period. This means investors who bought a low-cost MSCI World tracker fund or ETF such as iShares's MSCI World UCITS ETF (IWRD) would have been much better off. This consistent underperformance was enough for Bestinvest to label the fund as a 'dog' fund.
In relation to its peer group, the IMA Global Sector, over five years to 28 July 2014, The Neptune Global Special Situations Fund returned a disappointing 27 per cent compared with 66 per cent average return by its peer group, according to Trustnet data.
The fund has 56 per cent of its portfolio invested in the US, with 11 per cent in Peru and 6 per cent in Japan. Sector-wise it is most heavily invested in industrials (17 per cent), financials (16 per cent) and information technology (16 per cent).
When bought through a fund supermarket, clean share class shares in the Neptune Global Special Situations Fund can now be purchased for an annual fee of 0.75 per cent. But investors already holding the fund, as well as those buying it directly, are paying a relatively high total expense ratio (TER) of 1.75 per cent, which looks expensive compared with other global funds. For example, investors could buy THS International Growth and Value Fund (GB00B3XW0Y79) (highlighted by Bestinvest as a "pedigree fund" in the global sector), which also tracks the MSCI World Index, for 1.09 per cent a year.
When asked about why the fund has consistently underperformed, Neptune had no comment.
