The sector bets powering Neptune’s global long/short fund

Neptune has outlined the underweight and overweight sector positions driving its Global Long/Short Sector fund, three months on from launch.

The fund, which launched on 1 November and is co-managed by Robin Geffen and Ted Alexander, expresses sector views through long, short or neural positions in baskets of between 20 and 50 swaps, which have 15% emerging market exposure.

Speaking at the Alpha Generators conference this week, Alexander (pictured) said the fund is underweight financials, healthcare and utilities, as all three sectors are subjected to political interference.

“The sectors we are avoiding and running underweight positions to are in areas which are prone to a lot of political risk,” said Alexander.

“We still do not like banks as the debt levels are far too high and the financials sector is a risky place to invest in when there is so much uncertainty over the eurozone sovereign debt crisis.

“Meanwhile, healthcare is subjected to a lot of government subsidies, and as a result we are running an underweight position, while utilities are the most expensive sector in the market on a P/E basis.”

He added he is also concerned about rising energy prices, which will potentially weaken share prices in the utility sector.

The fund shorts sectors for which Neptune’s in-house global sector matrix has forecast a bearish outlook for, while adding gearing to sectors the group anticipates will outperform.

In terms of overweights, Alexander is finding value in the energy, industrials and materials sectors.

He is also running mild overweights to the consumer discretionary and consumer staples sectors.

“The industrial sector has a number of quality developed companies which are expanding their customer base and reach globally to the emerging markets.”

Alexander added Caterpillar is an example of an industrial company making waves in the emerging market space, with the company offering $885m for Chinese mining manufacturer ERA Mining at the end of November.


This article was first published on Investment Week

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