Neptune has been hit hard by wealth manager Tilney Bestinvest's latest Spot the Dog round-up of underperforming funds, with five of its products featured in the report. The news comes at a bad time for the group, which has closed around a third of its funds in the past year.
Despite no European funds making it into the list last year, four UK domiciled unit trusts and open-ended investment companies (Oeics) have been named as dogs in January's edition, two of which were Neptune funds. It follows a raft of closures to the company's product range resulting in around a third of its funds being shut down.
Neptune European Opportunities Fund A ACC (GB0032308594) and Neptune European Income A Acc (GB00B58TB772) were both cited as consistent underperformers in the Tilney Bestinvest report this year. It is the second time for Neptune European Opportunities, which returned a loss of 9.23 in 2014 compared with 0.02 for the MSCI Europe ex UK index, but the first for Neptune European Income (GB00B58TB772).
The Neptune European income fund has seen a flurry of management changes in recent months, with former manager Rob Burnett replaced by James Hackman in 2013. Mr Burnett then took the role back again in Janaury 2014.
It has consistently underperformed the benchmark since launch, with a five-year cumulative return of 20.40 compared with the MSCI Europe ex UK Index of 34.77 and in 2014 returned a loss of 3.04 compared to a 0.02 return for the benchmark.
Tilney Bestinvest defined it as a persistent underperformer after failing to beat its benchmark over three consistent years, adding up to an underperformance of 10 per cent or over for that entire three-year period.
Mr Burnett blamed an underweight position in healthcare and its weightings towards energy and industrials in the third quarter of last year and conceded that the euro-centric gearing of the fund meant it was hit by a strong dollar. However he argued that valuations for euro-centric businesses remain compelling.
In relation to the European Opportunities fund Tilney Bestinvest said: "It was a reasonably high profile fund in the past, but more recently the manager has struggled to adapt his process to the challenging macroeconomic environment in the region."
The report follows the fund house's decision to close its Russia and China Special Situations funds in November 2014, less than three years after they were launched and its Global Long/Short fund in January following the departure of one of its co-managers. It means the company has closed 13 funds in the past two years, amounting to around a third of its funds.
The company has reportedly been on a rationalisation project in a bid to re-focus its operation following the Retail Distribution Review in 2013. This week it became one of the first UK fund groups to publish the active share figure for each of its equity funds in a bid to demonstrate its conviction in stock selection.
Robin Geffen, fund manager and CEO, Neptune said: "We are proud of the extent to which our performance over the past decade has been driven by taking high-conviction positions in companies. My challenge is to other asset managers to follow suit and publish end-of-year figures so that investors can compare active funds like for like."
