Neptune fund doubles to £700m

Neptune fund doubles to £700m

Neptune’s Mark Martin has said it has been comparatively simple to invest inflows into his fund, in spite of the portfolio doubling in size since the start of the year.

Mr Martin’s UK Mid Cap fund has increased from £360m in size at the start of the year to £700m.

In the past year, only Old Mutual Global Investors’ Richard Buxton, Lindsell Train’s Nick Train and Jupiter’s Steve Davies have enjoyed higher levels of inflows into their UK equity funds, data from FE Analytics shows.

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The Neptune manager has had to invest these inflows into a UK mid-cap space which Schroders said earlier this year was suffering from reduced liquidity.

But Mr Martin said such problems were “not an issue” for him.

He added that the growth of his portfolio had not impacted his investment decisions, and that the fund was “sufficiently far away” from requiring the implementation of capacity constraints.

Accordingly, the manager has used inflows to add to favoured sectors, such as healthcare. Companies from this industry represent the Neptune UK Mid Cap fund’s largest sector overweight.

“We have been opportunistically adding to some positions on the recent weakness in the stockmarket, since it has presented some opportunities to buy companies we like,” Mr Martin said.

Healthcare makes up just 3 to 4 per cent of his benchmark, the FTSE 250 index. But he now holds 22 per cent of his fund in the sector.

The manager added to his positions during the downturn in markets in August, buying more of stocks such as pharmaceutical company Vectura, which is involved in product development for airway-related diseases.

The stock was already his third-largest position, making up 5.1 per cent of the portfolio at the end of July.

Content with his holdings, Mr Martin did not sell out of any amid the recent market volatility.

“We are keeping a very close eye on the Chinese economy, but so far we have not seen anything that gives us cause for concern,” he said.

“The volatility of recent markets is quite healthy. It’s been a long time since we’ve had it.”

During the volatility the manager also added to his fourth-largest holding, Devro, which made up 4.9 per cent of his portfolio at the end of July.

Devro manufactures and distributes goods derived from collagen, principally sausage casings.

Meanwhile, Mr Martin has continued to offload some of his plays in the housebuilding sector.

The manager was an early adopter of positions in housebuilders, first investing in the sector in 2009 – a decision that helped him move up the performance ranks.

However, he dumped all of his holdings in the sector at the end of last year.

He maintained exposure then by holding housebuilder suppliers such as Marshalls, which manufactures natural stone and concrete landscaping products. But he has since sold out of that stock on “valuation grounds”.

Nonetheless, Mr Martin is sticking with his largest position, flooring and bed retailer Carpetright.