Geffen to stick with 110% yield target

Geffen Robin Neptune 2014

Neptune founder and chief executive Robin Geffen will continue to target a 110 per cent yield in his Income fund despite yesterday’s decision by the Investment Association to lower the sector requirement.

From 3 April, the trade body will be reducing the yield target on its IA UK Equity Income sector from 110 per cent to 100 per cent of the FTSE All-Share index, in the interests of investors, it says.

Roughly 20 per cent of funds having been ejected from the sector to date, moving into the broader All Companies or Specalist peer groups.

Neil Woodford’s latest Income Focus fund will sit in IA Specialist, for example.

Geffen says investors have chosen his income fund with a specific objective in mind and, as such, it should be managed according to that mandate, rather than lower its bar in line with the sector minimum.

He says: “In spite of today’s decision we will continue to target a 110 per cent yield relative to the FTSE All-Share.

“Investors have bought the Neptune Income fund on the understanding that the fund has a specific income focus, and as such we believe it is our duty to the client to continue to run it on that basis.

“In the interests of transparency and treating both prospective and existing customers fairly, we think it is crucial that the fund’s core principle remains intact.”

He adds income funds delivering a higher and diversified income stream are a “huge help” to investors in today’s low return environment.

“The Neptune Income fund has long-prioritised a high and rising income, and will continue to do so.”

The fund is currently yielding 4.88 per cent, which compares to 3.45 per cent from the FTSE All-Share.

It is currently ranked third in the sector, having delivered a 31.5 per cent return over three years, compared with the peer group’s 20.5 per cent and 21.8 per cent from the All-Share.