Dan Jones  

Neptune's recovery is going into reverse

Dan Jones

Dan Jones

Fund management turnaround stories are ten a penny. A cynic would say that’s because all asset managers will eventually happen upon a period of good performance. 

A more generous assessment would say it shows the power of applying reliable processes to both distribution and portfolio management itself.

Either way, one of the more notable back-and-forths of recent history has been that seen at Neptune. The departure of US manager Robin Milway, announced last week, is the latest evidence that the pendulum has swung back in the wrong direction.

Launched in 2002, the company quickly built a reputation on the back of the strong returns delivered by the likes of Rob Burnett in Europe, Felix Wintle in the US, and founder Robin Geffen across a range of mandates.

The firm then stuttered at the end of its first decade amid a drop-off in performance, the perception that Mr Geffen was in charge of too many portfolios, and persistent rumours about a possible sale of the company.

Those problems started to fade from 2014 onwards, helped by a strategic review that shut many funds, focused on promoting other members of the investment team, and saw the firm sensibly position itself as a pioneer on the ‘active share’ issue.

Last year even Mr Burnett’s European Opportunities fund, a stubborn laggard, began to show signs of a recovery. But 12 months later the portfolio is a rare bright spot for the firm.

Mr Milway was the third senior US equity departure in 14 months, and the exodus has not been confined to this asset class. 

China manager Doug Turnbull has also exited earlier this year, and distribution head Charlie Parker moved on in May.

Mr Parker’s arrival at Neptune coincided with a revival in its fortunes, but more recent initiatives have not proved as fruitful. The wealth management arm he sought to establish has been quickly discontinued following his exit, for example.

Meanwhile, the pivotal area for the firm – fund performance – has also proved tough to sustain year to date. This may be in part because many portfolios are positioned for a stronger US dollar, something that has failed to materialise this year.

From Neptune’s perspective, an additional cause for concern is that the outflows experienced during its fallow years never quite stopped entirely. The recent upheaval will have further dented fund buyer confidence, meaning further redemptions could be in the pipeline. 

The company has to do some hard thinking in order to stop the latest shift in fortunes becoming permanent. 

Dan Jones is editor of Investment Adviser