Healthcare will be an important flavour for two new funds, including the new Asian income fund from former Newton fund manager Jason Pidcock, which launched this week. Jupiter Asian Income (GB00BZ2YMK87) will include more exposure to high-growth healthcare and Philippines-listed stocks than Newton Asian Income (GB00B8KPW262) did under Mr Pidcock's tenure, as it will take a more flexible approach to yield.
Unlike Newton Asian Income, which targets a yield of 35 per cent over the benchmark index, Jupiter Asian Income is not targeting a set yield figure and doesn't have single-stock dividend requirements. The change will enable the manager to invest in fast-growing companies with small yields that have the potential to become larger income players. Mr Pidcock said Jupiter Asian Income should still yield around 20 per cent more than its benchmark, but will include a greater number of high-growth companies and more exposure to sectors such as healthcare, which he was previously restricted from owning due to low payout ratios.
Around five of the companies which he can buy offer exposure to the Philippines and healthcare. The other differences with Mr Pidcock's former, highly successful Newton Asian Income fund will be a smaller number of holdings - 40-50 stocks - and more of a focus on large, liquid stocks. Jupiter Asian Income is targeting a 9 per cent annual total return, made up half from income and half from capital growth.
Also launching soon is Healthcare Royalties Trust, the first UK-listed vehicle providing exposure to healthcare royalties. This investment trust will focus on the world's largest healthcare companies, including names such as Pfizer (US:PFE) and GlaxoSmithKline (GSK), targeting an initial dividend yield of 6 per cent per year and a total return of more than 10 per cent over the medium term. But rather than investing directly in healthcare equities the trust's income will be generated by royalties from major biotech and pharma companies.
Royalties are often cited as fairly uncorrelated assets compared with other markets because they do not depend on corporate earnings or equity market fluctuations, making them a good diversifying element within a portfolio. The underlying contracts also promise steady, monthly payments so are a good income asset. The trust claims that the growing trend of pharma giants licensing drugs in-house rather than inventing new products will boost the royalty market and generate consistent returns.
