A high conviction active approach

04 April 2014   Category: News, Asia, Global, United Kingdom   By Hui Ching-hoo

London-based, long-only asset manager Neptune Investment Management is eager to tap into the Asia-Pacific region, a main motive being the perception that local investors are increasingly interested in active investment, with a view to maximising their returns.

Douglas McDowell, Neptune’s head of client investment strategies, says the firm has made remarkable headway in making a mark in Asia since its first foray into the world’s fastest growing economies in early 2013.

“We’ve been talking to various Asian institutional investors, such as wealth managers, private banks, and family offices over the past 12 months, and we’re upbeat about the response so far. These investors are very comfortable with an equities-investing approach, stating a strong desire to capture differential returns,” he points out, adding that the firm has appointed Hong Kong-based fund specialist Peak Capital to distribute its mutual funds in the region.

“The reason we expanded our business East is that investors in this part of the world have a relatively high appetite for risk, and they are willing to listen to contrarian investment ideas,” he adds.

Mr. McDowell sees the liability-asset models of some pension funds as an indication that their active young members are looking to maximise their returns, especially when a fund’s return is profitable enough to meet their liabilities.

Neptune currently offers private investors and advisers, as well as institutional investors, a range of collective investment schemes. Its product line up is diverse, featuring European opportunities, emerging markets, Japan opportunities, and UK mid cap funds.

Mr. McDowell explains that Neptune’s Japan and European funds have been very well received in terms of the scale of fundraising. That’s due to a large extent to the US and Japanese markets being highly diversified, meaning the firm can act on its strong views on sectors. “Our vision is that if we can replicate our sector view in a given geographic area, we’re likely to launch a fund linked to that area,” he says.

Regarding regional allocations, Mr. McDowell says he has observed a significant shift from emerging markets to developed markets over the last 15 to 18 months. “We placed a large amount of money in emerging markets because of their burgeoning growth. But we gradually whittled down our investments in Brazil, India, and Russia in the aftermath of the global financial crisis as we reckoned developed markets were much better equipped to address the severe stresses brought on by the crisis than emerging markets.”

Neptune has also increased its port-folio weighting in Japan from zero to around 20-plus percent over the last two years, driven by the country’s better-than-expected economic performance – and “profoundly” inexpensive valuations.

Neptune was established in 2002 when its founder Robin Geffen transferred four funds from Switzerland-based Orbitex into the firm. Presently, the investment boutique has total assets under management of approximately US$10 billion.