- Jason Pidcock has an eye for detail, focusing on both company specifics and wider economic trends
- An emphasis on income adds something a little different to most Asian funds that focus on growth
- The manager has a long and successful track record investing in Asia for income
- This fund is on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential
How it fits in a portfolio
The Jupiter Asian Income Fund aims to pay a regular income and provide investment growth over the long term. This makes it different from many other Asian funds that focus on growth. The fund mainly focuses on more developed Asian markets, such as Singapore, Australia, and Taiwan, though it also invests in some higher-risk emerging markets.
We think the fund could form part of an income investment portfolio or help to diversify the Asian portion of a broader global portfolio. If the income is needed now, it can be reinvested to boost future growth potential. Unlike many Asia funds, this one doesn’t currently invest in China, so it could sit alongside other funds that invest more in China.
Jason Pidcock started running funds investing in Asian companies in 1996 and spent three years prior to this analysing and investing in the region. In 2005 he set up BNY Mellon Asian Income (previously Newton Asian Income) and became one of the first UK fund managers to run an Asian fund focused on income, rather than purely growth. He built a strong reputation from running this fund before he left in 2016 to set up Jupiter Asian Income. We view him as a meticulous investor with a focus on the finer details, and we like that he's aware of both his strengths and weaknesses.
Pidcock is currently the sole manager on this fund and dedicated to this single strategy. He also collaborates with some of the wider investment team at Jupiter to discuss ideas and get additional input. There has recently been quite a bit of change in the emerging markets team, though we don’t think this directly impacts the manager or this fund.
In October 2022, Pidcock will be joined by an experienced Asian equities analyst as co-manager of the fund. They will help run the fund, find new investment ideas, and provide a source of challenge to the lead manager.
Pidcock believes investing in companies that generate strong profits and growing dividends is the best way to achieve good returns over the long run. He thinks companies that are willing to share a portion of their profits as dividends care most about the interests of their shareholders.
This fund's main aim is to provide an income at least 20% higher than the fund's benchmark, the FTSE Asia Pacific ex Japan Index. It also aims to provide greater capital growth than this benchmark. To do this, the manager looks for companies that pay an attractive income and have the potential to grow dividends over time. He also invests in some companies that pay a lower income but have greater growth potential.
Companies that make plenty of cash, have low levels of debt and are in good financial health are favoured. They should also be run by robust management teams and having regular contact with them is key to the manager's process. Pidcock also considers wider economic themes in his analysis and takes note of the political landscape which he feels has a bearing on what occurs in different economies.
We like the fact Pidcock keeps things simple with this fund. He sticks to his tried-and-tested philosophy and doesn't do anything complicated in the pursuit of short-term gains that could compromise long-term performance. He invests in a fairly small number of companies, currently 26, which means each one can have a significant impact on performance though this increases risk. On a longer term basis, the manager aims to have at least 30 companies in the fund.
The manager mainly focuses on larger businesses in developed Asian markets, such as Singapore and Australia. The fund can invest in emerging markets as well, and currently has some exposure to markets such as India and Thailand.
Over the past couple of years, Pidcock has been reducing the fund’s investments in China, and in July 2022 he sold the last of the fund’s China stocks completely. He has become increasingly concerned about China, both economically and politically. In particular, he notes the country’s hostility towards Taiwan, rising tensions with the US, and the potential for growth to continue to slow. While he thinks it’s unlikely China will invade Taiwian – believing it could mark the end of Xi Jinping’s communist party and lead the country into recession – he prefers to take a more conservative approach and not have any exposure whatsoever.
Hygiene business Hengan and food companies Tingyi and Want Want were the final three Chinese companies sold from the fund. Sands China, a resort and casino operator listed in Macau, has also been sold. Pidcock hasn’t ruled out investing in China again in future, but it’s unlikely he’ll invest there in the near term.
Elsewhere, he’s added to investments in Australia, which make up 38.1% of the fund. Some of the fund’s largest holdings currently include Woodside Energy, miner BHP, and financial services group Macquarie.
At Jupiter, fund managers are given autonomy to invest the way they see fit and believe will benefit investors over the long run, but with an appropriate level of challenge from others in the business. The business setup allows Pidcock to focus on fund management and maintain flexibility.
That said, we view it positively the manager will receive input and support from a co-manager from October 2022. This ensures he has someone to discuss investment ideas, and to provide a forum for challenge and debate. It also shows succession planning is being considered. While Pidcock intends to run the fund for many years to come, it makes sense for someone else to get to grips with the investment process over a prolonged period.
The manager invests his own money in this fund, and we think he’s incentivised in a way that could maximise long-term performance, meaning his interests should be aligned with those of investors.
Jupiter’s approach to Environmental, Social and Governance issues (ESG) is fund manager led, so the fund managers themselves are responsible for implementing ESG in their investment decisions. They typically approach these issues with a materiality-based approach, meaning they focus on ESG risks most material to each company. The firm also subscribes to several third party data providers, which offer information that fund managers can use in their research. Where red flags are raised, the managers go away and investigate.
Pidcock has always focused on companies with good governance standards. He takes a ‘best-in-class’ approach in each sector, which means he focuses on those with the highest standards. He also considers environmental and social risks, though this is not an exclusions-based fund, which means he can invest in any type of company or sector.
This fund is available at a net ongoing fund charge of 0.69%, after a 0.29% discount available through the HL platform. The usual ongoing charge is 0.98%. The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP. The HL platform fee of up to 0.45% per year also applies.
Over the length of his career, Pidcock's funds have performed better than the broad Asian stock market, as measured by the FTSE Asia Pacific ex Japan Index. His focus on larger, quality companies that tend to generate cash at a steadier pace than others mean we expect the fund to hold up relatively well when markets go through a tough patch. This won't necessarily happen all the time though and as always past performance isn’t a guide to future returns.
Since launch of this fund, it’s grown 107.38%* compared with 97.23% for the index and 95.57% for the average fund in the IA Asia Pacific ex Japan sector. The past year has been a strong one, helped by the fund’s low exposure to China, as China has been one of the weakest Asian markets over this time. The Indian, Australian, and Singaporean markets have also been stronger and helped performance. Our analysis also suggests individual stock picking has helped returns, which means some of the manager’s stock picks have gone on to perform well, regardless of which country or sector they’re based in.
Investors should note that the fund’s lack of investments in China will have a significant impact on performance at times. China makes up almost 30% of the broader Asian market, so when it’s weak the fund could benefit, but if it performs strongly this will hamper returns.
The fund has paid an attractive annual income so far since launch in 2016, and its yield has also remained comfortably ahead of the FTSE Asia Pacific ex Japan Index. The fund currently yields 3.7%. Dividends have recovered well since the worst of the Covid pandemic in 2020, and most companies in the fund have raised dividends so far this year. Remember dividends are variable and yields are not guaranteed nor an indicator of what you might get paid in future. The fund’s charges are taken from capital, which could increase the yield but reduces the potential for capital growth.
|Annual percentage growth|
| Aug 17 -
| Aug 18 -
| Aug 19 -
| Aug 20 -
| Aug 21 -
|Jupiter Asian Income||1.58%||9.47%||-3.31%||20.24%||12.36%|
|FTSE Asia Pacific ex Japan||2.35%||1.71%||7.88%||17.29%||-3.36%|
|IA Asia Pacific Excluding Japan||1.78%||3.68%||7.79%||17.41%||-4.01%|
Past performance is not a guide to the future. Source: *Lipper IM to 31/08/2022.
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