NeptuneMay 24 2017

Neptune’s Geffen on protecting investors like his Mum

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Neptune’s Geffen on protecting investors like his Mum

Robin Geffen, founder and fund manager of Neptune Investment Management, has revealed the reason he won’t change the target for his UK Equity Income fund.

Back in March the Investment Association announced it had decided to lower the UK equity income sector’s yield hurdle from 110 per cent to 100 per cent of index yield over a three-year rolling period.

Although the new three-year rolling yield target is now set at 100 per cent, failure to achieve 90 per cent of the index yield in any one-year period will still result in a fund being removed from the sector.

But Mr Geffen, who founded Neptune Investment Management in May 2002, said he wouldn’t change the target for the UK Equity Income fund, which has delivered an 18.8 per cent for the year to the end of April, claiming that people hadn’t invested in his fund for it to just match the FTSE All-Share index.

Speaking at FTAdviser’s Income for all event in London today (23 May), Mr Geffen said: “This fund was sold to deliver 110 per cent of the yield of the FTSE All-Share, as were all income funds up until about a month ago when the IA changed the rules

“I, along with some other managers, have pledged to continue to deliver the yield on a rolling three-year basis of 110 per cent as that was what the fund was sold at. That is what people want.

“My typical investor would be someone like my 85-year-old mother who relies on a series of income funds to deliver the money for her to live on in retirement. 

“She would be very upset if I was to reduce the yield on the fund down to the FTSE All-Share yield because I would be cutting her dividends. I am not going to do that.”

At the time of changing the UK equity income sector’s yield hurdle from 110 per cent to 100 per cent of index yield, the Investment Association’s capital markets director Galina Dimitrova said the change was designed to ensure that consumers and advisers had better visibility of the choice of equity income products that exceed their respective market yields. 

Ms Dimitrova said: “As ever, we will continue to monitor the fund market to ensure that all of the IA sectors reflect the wide range of products the asset management industry has to offer savers around the world.”

emma.hughes@ft.com