Trust dumps Geffen Russia fund for ETF

New Star Investment Trust has £112m in total assets

Neptune downplays tech sell-off and US/China trade war

A London-listed investment trust has dumped Robin Geffen’s Russian equity fund in favour of a cheaper passive alternative.

New Star Investment Trust revealed in its annual report it had replaced the Neptune Russia and Greater Russia fund led by Geffen (pictured) with the HSBC MSCI Russia Capped ETF.

Russian equities were one of the best performing sectors for the trust over the period, rising 24.29% thanks in part to the boom in oil prices, which increased 57.46% in sterling terms.

Geffen’s £177m Russia fund has outperformed peers in the IA Specialist sector, producing nearly triple the returns in three years (99.8% versus 36.6%). It also came out ahead of other Russia-specific funds within the sector on a one-year view but was behind Pictet Russian Equities on a three and five-year view.

The HSBC MSCI Russia Capped ETF returned more than Neptune Russia over one-year (12.4%) but less on a three and five-year view (78.7% and 8.0% respectively).

Portfolio Adviser reached out to Neptune Investment Management for comment but did not hear back.

Russia Equity funds1-yr3-yr5-yr
Baring Russia-6.51%57.87%-5.95%
HSBC GIF Russia Equity4.38%65.35%1.31%
JPM Russia2.71%52.28%-5.33%
Neptune Russia9.26%99.84%19.60%
Pictet Russian Equities3.11%109.63%24.89%
Source: FE Analytics

Cheaper Europe

Chairman Geoffrey Howard-Spink said the company had been targeting cheaper markets in Europe where it expects monetary policy to remain looser for longer and the UK where prices have been impacted by Brexit pessimism.

The FP Crux European Special Situations fund, the trust’s largest holding, rose 2.92% over the period marginally outperforming the 2.70% gain from Europe ex UK equities. It accounted for 10.09% of net assets.

Of its UK equity funds, Man GLG UK Income outperformed with returns of 13.47%, while Trojan Income disappointed falling 1.02%. The funds account for 2.63% and 2.14% of net assets, respectively.

Results were also mixed for the trust’s UK Smaller Companies holdings. Aberforth Split Level Income Trust, its fifth largest holding, was up a meagre 0.71% but MI Brompton UK Recovery gained 10.02%.

Though the trust has a small allocation to the US where it believes valuations look high, its global equity holdings Fundsmith Equity and Polar Global Technology benefited from their large positions in American tech giants.

It took partial profits on Fundsmith Equity in November 2017, which rose 15.18% over the period.

Narrowing discount  

During the year New Star Investment Trust continued to trade at what it said was “a significant, albeit narrowing discount” of 27.9%. Its net asset value rose 6% from 148p to 157p.

It produced a total return of 6.5% for the year ended 30 June 2018 beating the IA Mixed Investment 40-85% Shares index’s 4.9% but underperforming the MSCI AC World Index’s gains of 9.5%.

Returns were down 63% from the previous year when it generated 17.9% for investors.

New Star Investment Trust launched in 2000. It currently has total assets of £112m.

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