Investors usually look to Asia for capital growth, but this is only half the story, as Jason Pidcock, manager of the Newton Asian Income Fund, tells The Daily Telegraph. Since his fund launched in 2005, “roughly half of the total return has come from income and the rest from capital gains”.
Over the past five years the fund has returned 84.7%. It pays quarterly dividends and has raised these every year since launch – it now boasts a historic yield of 5.71%. “We don’t guarantee to grow the dividend every year, but our objective certainly is to grow income over time,” says Pidcock.
The fund is invested across a broad range of Asian countries, including China, Thailand, Singapore, Taiwan, Hong Kong and Australia. Pidcock doesn’t hedge against currency fluctuations, because “over time, currencies in the region are likely to do reasonably well against sterling: appreciate or at least hold firm”. However, he may choose to avoid a market if the currency looks likely to be weak.
Right now the fund is positioned defensively, “investing in companies with strong balance sheets that are returning hard cash to shareholders”, Pidcock tells the Evening Standard.
Industrials make up 28% of the fund’s holdings, including industrial transportation group Hutchison Port Holdings. Australian gas pipeline company APA is another key holding – the company moves half of the country’s gas and is pushing to become a major exporter.
However, Pidcock has recently cut his exposure to South Korea to just 2.8% of the fund, in the belief that the country will eventually integrate with North Korea, to the detriment of shares.
Contact: 050-0660 000.
Newton Asian Income Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Hutchison Port Holdings | 4.8 |
| Advanced Info Service | 4.4 |
| Taiwan Semiconductor | 4.2 |
| Link Real Estate Investment Trust | 4.1 |
| China Mobile | 4.1 |
| Transurban Group | 3.9 |
| APA Group | 3.8 |
| AMP | 3.7 |
| NWS Holdings | 3.3 |
| Philippine Long Distance Telephone | 3.3 |