Geffen hits back after Principal warning

Neptune CEO Robin Geffen has hit back at Principal's latest income study after it recommended investors ditch his £1bn Neptune Income fund.

In the February 2012 income study from Principal, the group put the Neptune Income fund on the Grey List with a ‘switch' recommendation, warning the fund's growth emphasis is likely to disappoint this year.

However, Geffen has fired back, arguing over the past year the fund delivered a yield of 5%, in excess of the IMA requirement of 3.9%.

He added over a five year view he has outperformed the wider market, with the fund sitting above the average fund return on Principal's White List if longer term performance was taken into consideration.

"If you look at net dividend yield and net income over 5 years on the Principal report, both Neptune funds have outperformed the White List average and Grey list average, showing our focus on delivering income," said Geffen.

"Moreover, 30 out of the 33 stocks held by the Fund increased their dividend, with impressive growth seen from Compass Group (37.7%), Rio Tinto (26.7%) and Legal & General (25.1%)."

He added last year was the first and only calendar year that the Neptune Income Fund has not been in the 1st or 2nd quartile since launch in 2002.

Geffen also countered comments by Principal that his fund has a greater focus on growth as opposed to income.

The group said the fund maintains its dual objective to deliver income alongside the potential for capital growth.

"No change in the structure of the fund has been made, nor is any anticipated," a spokesperson for Neptune said.

Geffen's fund has seen performance slide over the last year, with a loss of 0.3% compared to an average gain of 0.9% seen in the IMA UK Equity Income sector over the past 12 months (according to Morningstar, to 3 February)

However, over the longer term his fund remains one of the standout performers in the peer group, well ahead of the sector average over 5 years.