Neptune profits tumble 40% in 2013 as headwinds impact global approach

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Neptune Investment Management's profits before tax fell by over 40% in 2013, against a backdrop of falling assets under management, after a difficult year for its global investment approach.

Profit before tax was £7.4m, according to the company’s accounts, down 42% compared to the £12.8m profit it reported in 2012. Group revenue for the year fell 14% from £85m to £72.9m.

Assets under management also fell by 7.8%, to £5.4bn, with the group blaming both "abnormal" central bank policy and the company's much greater emphasis on international investment - in particular its greater exposure to the US dollar - for the falls.

Chairman Jonathan Punter said: “Neptune is much more internationally positioned than most of its UK-centric competitors and this strategic strength has had a short-term negative impact, exacerbated by the current overvaluation of sterling.”

The business remains “robustly healthy and profitable”, he added.

Globally-exposed Neptune funds include the Global Equity fund, which returned 16% over the three years to 17 September 2014, compared to a 38.6% sector average, according to FE, and the Global Special Situations fund.

The firm also runs a number of specialist international strategies including the Neptune Russia & Greater Russia fund, which has struggled against the backdrop of increased geopolitical tension. Over the year to 17 September 2014, it has returned -17.4% compared to a global sector average of 5%, according to FE. 

However, in terms of the UK market, the group's UK Mid Cap fund has outperformed with returns of 101.6% over the three years to 17 September 2014, compared to a sector average of 47.7%, according to FE. 

Neptune - which also reported a fall in profits in 2012 - has made inroads into cutting staff costs, with the spend on employees falling by 16.5% to £15m. This reflected a lower level of bonuses.

The firm said 2013 had represented the beginning of a move back into equities, with investors becoming more positive on the outlook for global growth. Its gross sales were up 6% compared to 2012.

Chief executive Robin Geffen (pictured) said: “This is in no small part down to the relationships that members of the team have forged in the UK intermediated market, which remains at the core of the Neptune client base.

“Unfortunately, these efforts were more than outweighed by the increased volume of redemptions, which rose markedly as funds flowed out of emerging market equities.”

The accounts mark a second challenging year for the privately-owned company. Neptune's profits before tax fell nearly 40% in 2012, with assets under management down 7.5%, after what the group called an "extremely difficult year for equity investors".

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