We have taken out the Neptune India Fund from our Global Master List, and subsequently from the OpenList. The decision applies to all share classes of the fund and it means that we suggest investing in another Indian fund to play this specific equity market.
Rationale: Lead Portfolio Manager departure
Kunal Desai, lead Portfolio Manager (PM) of the Neptune India fund has left the company. He will be replaced by Tom Smith, lead PM of the Neptune Latin America fund. He is also promoted co-head of Emerging Markets team alongside Ewan Thompson who is appointed co-PM of the Indian Equity fund.
The Neptune India fund was managed by Kunal Desai since December 2012. His departure is a significant issue for the fund, even if the two new PMs bring a lot of experience and stock picking skills. However, they are not Indian equity specialists, and they display a more EM generalist background.
Shortly after taking over the fund at the end of 2012, Kunal Desai implemented a series of improvements in the investment process as described hereafter:
- He was the architect of the distinctive three-silo process approach introduced under his leadership for idea generation and portfolio construction
- He has also enhanced the screening process, formalising how his universe of 5,000 stocks is narrowed down into his watchlist of 100 stocks. This includes not only liquidity filters but accounting quality and corporate governance criteria
- He made the process more bottom-up in nature, with in-depth company research and visits, leveraging his network of contacts with companies’ top managements
- He introduced a final checklist for fundamental analysis that he goes through before every decision to avoid behavioral biases and ensure this is mitigated against
For those reasons we think there is a key man risk associated with the departure of Kunal Desai and we have dropped the fund from our Global Master List. Accordingly, we also remove the fund from the OpenList.[/private]