Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

• Jason Pidcock has three decades’ worth of experience investing in Asia
• Sam Konrad joined as co-manager last October to provide additional support
• Performance over the long and short term has been strong, particularly in falling markets
• 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 seeks to deliver both income and capital growth over the long-term by investing in a concentrated portfolio of Asian companies. The fund mainly focuses on larger businesses in developed Asian countries except for Japan.

We think the fund could form part of an income investment portfolio or help to diversify the Asian portion of a broader global portfolio focused on growth. Unlike many Asia funds, this one doesn’t currently invest in China, so it could blend well with other funds that do.

Manager

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) where he built a strong reputation before leaving in 2015 to set up Jupiter Asian Income. We hold Pidcock in high regard and view him as a meticulous investor with a focus on the finer details.

Sam Konrad joined Jupiter in October 2022 as co-manager of the fund. Prior to this, he spent 17 years at UBS as an analyst and has experience across all major global markets. We believe Konrad’s philosophical views on investment align with Pidcock and his appointment provides Pidcock with challenge and debate around investment ideas. This appointment is also viewed as the first step towards a longer-term succession plan for Pidcock.

Process

The 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. The managers aim to do this by investing in companies that pay an attractive income and they believe have the potential to grow dividends over time. They also invest in some companies that pay a lower income but have greater share price growth potential.

Their stock-picking process seeks ‘quality income’ stocks – these are companies that make plenty of cash, have low levels of debt and are in good financial health. These businesses are typically industry leaders with advantages that are hard to replicate. They should also be run by robust management teams and having regular contact with them is key to the manager’s process.

Unlike many fund managers, the team at Jupiter pay close attention to ‘top-down’ factors, which means they consider the wider economy in their investment decisions. They pay close attention to the political landscape which they believe has a bearing on what occurs in different economies. For example, the managers currently have no direct investments in China due to concerns surrounding the health of the economy, government intervention and rising tensions with Taiwan. Instead, they prefer to gain exposure to China through companies that sell into the country.

This results in a portfolio of around 30 companies which means each one can have a significant impact on performance, though this increases risk. Larger businesses in developed Asian markets form the bedrock of the fund but it can also invest in higher-risk emerging markets.

Geographically, Australia, India and Taiwan account for over 60% of the fund and financials, technology are telecommunications form the biggest sector investments.

The managers like to keep things simple by sticking to a tried-and-tested philosophy and don’t tend to make too many changes. So far in 2023, they’ve sold Mapletree Logistics, a Singaporean company, due to a weaker dividend growth outlook. This sale made way for Australian mining services company, Mineral resources.

Culture

The fund managers at Jupiter are given autonomy to invest the way they see fit. They believe this will benefit investors over the long run, but the autonomy comes with an appropriate level of challenge from others in the business. This business setup allows Pidcock and Konrad to focus on fund management, their team, and maintain flexibility.

Both managers invest their own money in this fund, and we think they’re incentivised in a way that could maximise long-term performance, meaning their interests should be aligned with those of investors.

ESG integration

Jupiter’s approach to Environmental, social and governance (ESG) is fund manager led, so the fund managers themselves are responsible for implementing ESG in their investment decisions. They typically approach ESG 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 (including Sustainalytics, RepRisk, ISS and MSCI) which offer information that fund managers can use in their research. Where red flags are raised, the managers investigate.

Managers are held to account for their ESG decision making and are frequently challenged on their ESG analysis by the in-house Governance and Sustainability team. The team is also available to provide specialist ESG knowledge.

We like that engagement is not delegated to a separate department. Instead, the fund manager who made the decision to invest in the company leads engagement activity directly, allowing more meaningful and relevant engagement. The firm also votes at all shareholder meetings and provides a monthly voting record, available via its website, including rationale where it votes against management. More information about the firm’s ESG policies, voting record and engagement case studies can be found in its annual Stewardship report.

Cost

The fund has an annual ongoing fund charge of 1.01% but through HL, clients can secure an ongoing saving of 0.29%, reducing the net ongoing charge to 0.72%. The saving is achieved through a loyalty bonus which may be taxable if the fund is held outside of an ISA or SIPP. The HL platform charge of up to 0.45% a year also applies. Part or all of the annual charge is taken from capital rather than income generated, which could boost income, but reduces the potential for capital growth.

Performance

Pidcock has built up a strong track record over the course of his career. Since this fund launched in March 2016, its returned 102.27%* compared with 81.47% for the IA Asia Pacific ex Japan sector average.

Typically, his focus on larger, quality, dividend paying companies means we would expect the fund to hold up relatively well when markets are falling. This won’t necessarily happen all the time though and as always past performance isn’t a guide to future returns.

Although negative, the fund has performed relatively well over the past 12 months, returning -2.46% versus -7.21% for the IA sector average. Not investing in China has been a good decision over this period following a tough time for the world’s second biggest economy with the real estate sector and the political environment clouding sentiment. More recently, the funds consumer staples and technology investments have helped returns alongside strong performance from their largest investment, ITC limited, the Indian consumer goods firm.

Investors should be aware that although short-term performance has benefited from the fund’s lack of investments in China, this may act as a headwind for fund performance in future. China makes up a large part of the broader Asian market, so when it’s weak the fund could benefit relative to other funds, but if it performs strongly this will hamper returns compared to peers.

The fund currently yields 4.80%. Remember dividends are variable and yields are not guaranteed nor an indicator of what you might get paid in future.

Past performance is not a guide to the future. Source: *Lipper IM to 31/08/2023.

Find out more about Jupiter Asian Income, including charges

Jupiter Asian Income Key Investor Information

Important information – Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.

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