The Jupiter Asian Income Fund launched in March 2016 with the aim of combining Asia's exciting growth potential with its burgeoning dividend culture in a single portfolio. We recently met Jason Pidcock, the fund’s manager, to find out more about his views and how the fund has fared so far.
Asian stock markets have generally performed well this year and sterling weakness has provided a boost to the returns received by UK-based investors. In this environment the Jupiter Asian Income Fund has delivered attractive returns, although it has marginally underperformed its benchmark since August. Please note this is over a short timeframe and is not a guide to how the fund will perform in future.
Jason Pidcock focuses on high-quality companies with good yields and sustainable cash flows. This type of company has fallen out of favour with investors in recent months, according to the manager, while companies with less predictable earnings in more economically-sensitive sectors have tended to outperform. Given the fund’s lack of exposure to the latter type of business, it has missed out on some of the gains made from these areas of the market.
Limited exposure to stronger performing markets such as China and India also held back performance. The manager is cautious in his outlook for China given slowing rates of growth; debt build up; and increasing global competition, which is eroding China’s share of global exports. He doesn’t currently invest in Indian businesses due to the lack of dividend-paying opportunities in the country.
While the fund has exposure to higher-risk emerging markets, the majority of the portfolio remains invested in developed Asian countries, including Hong Kong, Singapore and New Zealand. Around one third of the fund is invested in Australia, which the manager feels is often overlooked by other investors and is less dependent on commodity exports than many others believe. In his view, Australia is home to a large number of high-quality and well-managed businesses, which have demonstrated a commitment to paying dividends. Current investments include Transurban, an Australian toll road operator, which has a good track record of growing profits and dividends. It also benefits from high barriers to entry from competition given its position in cities where economic and population growth, and therefore traffic growth, are likely to continue to rise.
Jason Pidcock adopts a long-term investment approach and has made few changes to the portfolio since launch. That said, he has sold an investment in Wynn Macau, a Chinese casino operator. Some of the profits were used to add to an investment in Sands China, another casino operator, which owns a greater proportion of Macau’s hotel rooms; has better-located casinos; and stronger dividend prospects, in the manager’s view.
Please note this is a concentrated portfolio, This means each investment can make a significant difference to performance, although it is a higher-risk approach.
We maintain our conviction in Jason Pidcock and the long-term prospects for the Jupiter Asian Income Fund. With a career spanning more than 20 years, our analysis shows the manager has an excellent long-term track record of stock picking. A focus on dividend-paying companies located in developed Asian economies also differentiates the fund from many of its peers which are focused purely on capital growth and have a greater bias to emerging Asian markets. The fund currently yields 3.7%, although this is not guaranteed into the future
We remain excited about the fund’s long-term income and capital growth potential and it maintains its place on the Wealth 150+ list of our favourite funds at the lowest ongoing fund charge. The Vantage charge of up to 0.45% also applies.
Please note the fund’s charges can be taken from capital which can increase the yield but reduces the potential for capital growth.