Jason Pidcock – manager of the Newton Asian Income Fund – has been investing in Asian equities for 17 years, and has run this fund since it launched in November 2005. The results so far suggest that all his experience has stood him in good stead. Over the last three years the fund has returned 30.3%, compared to an IMA Asia Pacific ex-Japan sector average of 8.3%. The historic yield, according to Morningstar, is 4.7%.
Pidcock takes a strict approach. As he tells Investment Week, “every stock… must yield at least as much as the regional index and it if falls to a 15% discount we sell it”. His fund’s yield easily beats the index yield of 2.9%. Another key plank of his approach is keeping the fund focused and having the confidence to back his hunches – “with around 45 holdings we are always fully invested”. He also believes in keeping things simple: “we do not use gearing, hedging, or derivatives”.
Pidcock prefers to play Asian growth via infrastructure stocks rather than consumer stocks because of the higher yields on offer. “A lot of consumer names have higher valuations so their yields are lower”. He tends to avoid banks, although he’s “comfortable” with those he holds.
One of his top holdings is Taiwanese smartphone group HTC. Its “products have been recommended in independent product tables”, helping the firm generate a total return of 133% so far this year. NWS Holdings is a pure play on China involved in power generation, ports and water treatment. Its total return (in $HK) this year is just under 39%. As for the risk of a pull back, “I have seen more 20% retrenchments than I can remember… it does not really faze us as long as we hold good companies”.
Contact: 020-7163 2802.
Newton Asian Income fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Advanced Info service | 5.1 |
| NWS Holdings | 4.5 |
| HTC Corp | 4.2 |
| Parkway Real Estate Investment Trust (REIT) | 4.0 |
| CNOOC | 3.6 |
| APA Group | 3.4 |
| Telstra Corp | 3.3 |
| Philippine Telephone | 3.2 |
| TuMacquarie Korea Infrastructure Fund | 3.2 |
| Link REIT | 3.2 |