- This fund offers a different way to invest in Asia
- It held up well last year when the broader Asian market went through a tough patch
- Jason Pidcock is most positive about developed Asian markets, like Australia
Asia isn't usually the first place people think of when it comes to investing for income. In the past, most Asian companies focused on growth and reinvested their profits back into the business. But more and more Asian companies now pay out some of their earnings as dividends to their shareholders.
There are only a handful of funds that invest in Asia for income. Even fewer are run by managers with long and successful track records. We think Jason Pidcock, manager of Jupiter Asian Income, is one of them and we recently met him for an update.
We're encouraged to hear it's business as usual for the manager. He continues to focus on companies that make lots of cash, have low levels of debt and are in good financial health.
We like that this fund is different to most other Asian funds. It could help diversify an income portfolio, or the Asian part of a portfolio. It yields 4.0% at the moment, though this is variable and doesn't guarantee what'll be paid in future. As one of our favourites, it currently features on the Wealth 50.
The wonder down under
The income it pays isn't the only thing that makes this fund different. Jason Pidcock mainly focuses on developed Asian markets, like Hong Kong and Singapore, while many other Asian funds invest more in emerging markets like China and India. He does have some investments in emerging markets though, which adds risk.
He also invests a large part of the fund in Australia, currently 26%. He's more positive about the country than some others are.
Australia has enjoyed many years of economic growth. Strong exports of natural resources, a booming property sector, and growing consumer spending have all played a part. The "wonder down under" hasn't had a recession for 27 years.
All economies go through tougher times though. Some commentators think a recession is inevitable at some point and a weaker housing market could be a sign of trouble to come. Household debt has also surged.
But this doesn't put Pidcock off. He sees plenty of positives.
Government debt is low compared with a lot of other economies. And this puts Australia in a stronger position if things do take a turn for the worst. Unemployment is also low at 5% and means most people are paid enough to pay their mortgages.
The manager's also focused on areas that aren't tied as closely to the housing market. He invests in a number of financial companies like Macquarie Group and Suncorp Group, as well as Star Entertainment Group, which provides entertainment and hospitality services so it could benefit from any rise in tourism. He's also recently invested in oil company BHP.
Jupiter Asian Income - geographical allocation
Source: Jupiter, correct at 31/12/2018
How's the fund performed?
Jason Pidcock's invested in Asia for income since 2005. He's built a good track record over this time.
His approach is more conservative than some other managers, so the fund's tended to hold up better when markets are weaker. We saw this last year when the broader Asian market fell. It doesn't tend to race ahead when markets are strong though. Past performance isn't a guide to future returns.
|Annual percentage growth|
Jan 14 -
Jan 15 -
Jan 16 -
Jan 17 -
Jan 18 -
|Jupiter Asian Income||n/a||n/a||n/a||10.9%||0.5%|
|FTSE AW Asia Pacific ex Japan||21.4%||-12.4%||39.2%||20.6%||-6.4%|
Past performance is not a guide to the future. Source: Lipper IM to 31/01/2019. Where no data is shown, figures are not available.
Pidcock also uses periods of market weakness to buy shares at a low price. Last year he bought insurance company Ping An, which he expects will become a leader in technology within China's financial services industry. He also added Singapore's DBS Bank, which currently has a high dividend yield and carries out business across South East Asia.
Please note the way the fund's charges are taken can increase the yield but reduce the potential for capital growth.