Neptune eclipsed at Lincolnshire and Royal London

The pension fund for Lincolnshire County Council axed Neptune from a mandate during the summer, it has emerged, while pensions provider Royal London is considering a similar move.

Lincolnshire, which had an £80 million global equities mandate managed by Robin Geffen, Neptune’s founder, decided at an investment committee meeting in July to terminate its contract. A spokeswoman for the county council confirmed the mandate has now been cancelled.

That followed a 6.5% loss for the Neptune mandate during the 12 months to June 30, compared with a 13.9% gain for its benchmark.

Lincolnshire has split its money evenly between Invesco Perpetual and Morgan Stanley Investment Management, with which it already has global equities mandates.

A Neptune spokeswoman declined to comment on the Lincolnshire mandate.

Meanwhile, Royal London, which has a £14 million investment in Rob Burnett’s European Opportunities fund, is reviewing this mandate “with a view to remove”. Its investment committee has asked its manager selection team to look at alternatives.

Lorna Blyth, investment strategy manager, said: “We are actively looking to replace this fund, and have a proposal put forward to the committee to terminate.” Royal London’s investment advisory committee is next due to meet on December 1.

Burnett’s fund has had a tough couple of years; it is fourth quartile in its peer group over three years, with a return of 22.3% annualised against 26.5% for the average fund in its sector, according to figures from FE Analytics.

However, Burnett has pulled off something of a turnaround in the past 12 months. The fund is up 22.9% for the 12 months to date, which places it first quartile for that period.

Charlie Parker, head of distribution at Neptune, said in a statement to FN on November 2 that the fund had experienced “a very significant recovery in its performance over the past year… this reflects the manager’s conviction that European value stocks present an enormous opportunity following a period of underperformance.

“We are pleased that the fund is behaving as expected during this value recovery. We are also pleased to report that the fund has in recent weeks attracted significant new support from both European investors and UK discretionary investors.”

Royal London is relatively unusual among providers of contract pension schemes in that it actively reviews the fund choices offered to pension savers, and will remove managers based on underperformance or other concerns.

It is a rare move, however; the last time it did so was in May 2014 after Neil Woodford left Invesco Perpetual; Royal London replaced his former Invesco UK equity income fund with an equivalent one at Fidelity.

Blyth said that while no decision had been taken on Neptune’s fund yet, there might be further fallout to come: “We do have some others from them in our range. There is potential we might look at all of them. There have been quite a lot of outflows from Neptune’s funds.”

Neptune’s 2015 accounts, published at Companies House on October 7, showed that pre-tax profits at the boutique fell 32% to £2.8 million from £4.1 million in 2014. Revenues, meanwhile, fell 14% to £50.6 million from £59 million, while Neptune’s assets edged down 6% to £4.5 billion.

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