Neptune to disclose dividend risk for equity income funds

Added 15th March 2017

To promote "diversified" income streams, Neptune Investment Management will include information about where its equity income funds get their yield from.

Neptune to disclose dividend risk for equity income funds

Investors in Neptune’s range of equity income products, which includes the Neptune Income and Neptune Global Income funds, will be able to see how much yield is derived from the top-ten holdings in a push toward greater transparency.

The dividend risk data will be available on the asset manager’s website and the funds’ factsheets and updated on a monthly basis.

“In the interests of transparency, we are taking measures to improve investors’ understanding of dividend risk,” said Neptune CEO and fund manager Robin Geffen. 

“In today’s low yielding environment, a diversified income stream from equity income funds is a huge help to investors.

"Understanding the extent to which yield is diversified is of crucial importance, and as such we are proud to be the first fund manager to make this information readily available to investors.” 

Geffen has long been a proponent of increased transparency in the industry.

In 2015, Neptune was the first fund house to include active share across its fund factsheets and Geffen personally called on the Financial Conduct Authority to make the disclosure of active share mandatory.

Referencing recent Morningstar data, Geffen has talked about the “alarming” trend that around one-third of UK equity income funds rely on their top-ten holdings to deliver more than 50% of their yield.

But he is adamant it doesn’t have to be this way: “In spite of the Investment Association’s recent change to IA UK Equity Income’s yield target, we are finding more than enough opportunities in the UK market to hit 110% of the FTSE All Share’s yield.

"Importantly we are able to achieve this from a diversified source of sectors and companies. The top-10 holdings only accounts for 25.8% of the Neptune Income Fund’s total yield.”


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