Neptune intends to merge its £11.3m Global Income fund into the £548m Global Equity portfolio.
The investment managers say the Global Income fund, run by Felix Wintle, has sacrificed too much total return for very little extra yield as a result of focusing on income.
It also says costs are disproportionately high in regard to demand for the income fund and the merger will allow investors a share of the scale available in the £548m Global Equity portfolio.
Investors will still be able to take a proportion of their return in the form of dividend payments from the merged fund.
“The objective of the Neptune Global Income fund was to generate strong dividend payments alongside the potential for capital growth,” Neptune CIO and Global Equity fund manager Robin Geffen says.
“Whilst both dividend payment history and capital growth of the Global Income fund has been solid, returning a healthy 9.1% year to date, this compares to a total return of 25.1% by the Global Equity fund over the same period.”
Geffen says the overall yield will be reduced as a result of the conversion, but the overall returns will potentially be better.
The proposed merger requires the consent of unit holders in the Neptune Global Income fund and an EGM is scheduled for 12 December.
If consent is not given, Neptune intends to apply to the FSA to close the fund.
The merger will involve no additional costs for unit holders.
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