Jupiter Asian Income: April 2020 fund update

Kate Marshall | Wed 29 April 2020

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• Jason Pidcock's attention to detail has seen his funds benefit from good stock-picking over the long term
• An emphasis on income adds something a little different to most Asian funds that focus on growth
• The manager has one of the longest and most successful records investing in Asia for income

How it fits in a portfolio

This fund aims to pay a regular income and grow an investment over the long term. It could form part of an income portfolio, or help to diversify the Asian portion of a global portfolio. If you choose to reinvest any income, it could boost future growth potential. Investing in Asia, along with the flexibility to invest in some emerging markets, makes it a higher-risk option.

Manager

Jason Pidcock started running funds investing in Asian companies in 1996, and he also spent three years prior to this analysing and investing in the region. In 1995 he set up BNY Mellon 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.

Pidcock is the sole manager on this fund and he is dedicated to this single strategy. He also collaborates with some of the wider investment team at Jupiter in order to discuss ideas and get additional input. 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, which he has used to his advantage over his investing career.

Process

Jason 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 AW Asia Pacific ex Japan Index. It aims to provide greater capital growth than this benchmark too. 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.

We like the fact Pidcock keeps things simple with this fund. He sticks to his tried-and-tested philosophy, no matter what's going on in the wider economy, and doesn't do anything complicated in the pursuit of short-term gains, which could compromise long-term performance. More and more Asian companies are starting to pay dividends, and he simply aims to take advantage of this.

He mainly focuses on larger businesses in developed Asian markets, such as Hong Kong, Singapore and Australia. The fund has the flexibility to invest in emerging markets though, and invests in a fairly small number of companies, which increases risk.

For example, Pidcock added his first investment in India to the fund last year. Indian companies haven't traditionally paid high dividends, but the manager invested in the new Embassy Office Parks REIT. REITs (Real Estate Investment Trusts) own or operate real estate and pay out rental income as dividends. Embassy Office Parks REIT currently owns a range of office parks and buildings.

He has also added three beverage companies to the portfolio, which he's been able to buy at more attractive share prices after recent market falls.

Culture

The culture at Jupiter is attractive. Fund managers are given autonomy to invest the way they see fit, but with an appropriate level of challenge from others in the business. The business setup allows Pidcock to focus purely on fund management and maintain flexibility.

We think Pidcock is incentivised in a way that could maximise long-term performance, which means that his interests and those of his investors should be aligned.

Cost

This fund is available at an annual ongoing fund charge of 0.69%, after a 0.29% discount available through the HL platform. This makes it one of the lowest cost funds available in the Asia Pacific ex Japan sector through HL. 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.

Performance

Pidcock's funds have performed much better than the broad Asian stock market over the length of his career. Our analysis shows he's invested in companies that have typically gone on to perform well, no matter what sector they're in or country they're based. Past performance isn't a guide to the future though.

Performance was strong last year boosted by investments in Taiwan. South Korea's Samsung Electronics, Chinese insurance company Ping An, Australian financial services firm Macquarie Group and some REITs also did well. The fund's performance isn't usually quite so strong when markets rise quickly, but overall stock-picking proved valuable last year.

Pidcock's focus on larger, quality companies that tend to generate cash at a steadier pace than others means 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, as we've seen so far this year. Investments in property-related companies, such as offices, retailers, casino and hotel operators, and toll roads have been held back due to the containment measures put in place by governments as a result of the coronavirus.

The fund has paid an attractive annual income so far since launch, and its yield has also remained comfortably ahead of the FTSE AW Asia Pacific ex Japan Index. Remember dividends are variable and yields are not guaranteed nor an indicator of what you might get paid in future. Fund charges are taken from capital, which could increase the yield but reduce the potential for capital growth.

Past performance is not a guide to the future. Source: Lipper IM to 31/03/2020.

*Full year data prior to March 2016 is not available

Find out more about this fund including charges

Key investor information