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".
The asset manager's profit before tax was £12.8m for 2012, down from £21.1m in 2011, its annual results have revealed.
Turnover - predominantly from management fees - also fell from £95m to £85m, while AUM for the group also fell by 7.5% to close the year at £5.8bn.
Neptune chief executive Robin Geffen (pictured) blamed the drop in profits on a "challenging year" for investors and the investment industry.
"2012 has been another challenging year for both Neptune and the fund management industry as a whole," he said.
However, he conceded the group had also made a number of calls on some equity sectors that had not worked out.
"With the benefit of hindsight in 2013, none of these views were different to what is now consensus but our sectoral weightings in 2012 were too geared towards cyclical plays in materials and industrials and we were underweight the recovery in global financials, given their poor fundamentals," he said.
Last month, Hargreaves Lansdown removed the £636m Neptune Income fund, managed by Geffen, from its Wealth 150 list.
It cited Geffen's stock selection as the main reason for disappointing performance over the past year.
