Fund Objective

The investment objective of the Neptune UK Equity Fund is to generate capital growth from investment predominantly in UK securities with the aim of achieving top quartile performance within the appropriate peer group.

View on Past Performance

The Neptune UK Equity Fund fell by -10.99% during the quarter, outperforming the IMA UK All Companies sector average of -13.78% and the FTSE All Share Index return of -12.18%."Normal" corporate news over July gave way to a sharp decline in commodity prices in August, characterised by the oil price falling as low as $112 from a peak of $145, prompting a sharp rotation into financials. This caused the FTSE 100 to rally nearly 5% by the month end as investors hoped inflation had peaked. September saw a return to reality with the US government rescuing Freddie Mac and Fannie Mae.The bankruptcy of Lehman Brothers and a Federal package to allow an orderly winddown of AIG froze money markets and caused sharp falls across the UK stockmarket, led by rapid declines in the share prices of financials. Thirteen months from the start of the crisis, most bank management teams and central governments were still in denial that they had to act to fill the lack of equity within banks.The abrupt about-turn in addressing the problems in the global banking industry began with the $700bn "Troubled Asset Programme" announced in the US to prevent another bankruptcy causing a meltdown in global banking. Other Western governments have since acted to repair banks' balance sheets, providing markets with some relief.

Future Expectations

There will be opportunities in the interest rate-sensitive sectors and we have built positions in a few companies, but the overwhelming balance of the portfolio is in businesses with very strong balance sheets and a high proportion of international earnings.End markets such as healthcare, power, rail and oil & gas are experiencing structural investment and remain relatively well insulated from consumer spending. We continue to find valuation abnormalities in these areas and believe these offer the best relative prospects in this downturn.

Fund Details