Get defensive income and growth via Jupiter Asian Income

A good way to tap into this potential could be via Jupiter Asian Income Fund (GB00BZ2YMT70). Although it only launched seven months ago, it is run by Jason Pidcock, a long-standing and successful Asian income manager, who built up an impressive track record running Newton Asian Income Fund (GB00B8KPW262). Between its launch in November 2005 and Mr Pidcock's departure in April 2015 this fund returned just under 200 per cent, compared with FTSE Asia Pacific ex Japan Index's 169 per cent return over that period and the Investment Association (IA) Asia Pacific ex Japan sector average of 152.2 per cent.

"Jason Pidcock has plenty of experience in this continent, having worked in the industry since 1993 and running the top-performing Newton Asian Income fund for a decade, comment analysts at Tilney Bestinvest.

Jupiter Asian Income has a concentrated portfolio of 40 holdings. These are a mix of developed country low-growth, high-income stocks, and ones listed in developing countriers such as the Philippines which offer high growth but lower yields.

"Mr Pidcock has no country or sector restrictions but, relative to rival funds, he has a bias towards more developed countries and larger companies," say analysts at Tilney Bestinvest. "This makes it a more defensive mandate."

The fund targets both income and growth instead of relying on unsustainably high yields, so it offers exposure to the income payers of the future while retaining a defensive, large-cap slant. It targets a total return of 9 per cent a year - half from income and half from growth.

The fund targets a yield of 20 per cent above its index, and has no individual country or company yield requirements. This means Mr Pidcock can invest in faster-growing areas such as healthcare stocks in the Philippines, a country that accounts for 7.3 per cent of the fund's assets. Dividend yields and payout ratios in the Philippines are lower than those in countries such as Hong Kong, where ratios are above 50 per cent, but the potential for future growth is higher.

The fund also has 6.8 per cent invested in South Korea, which doesn't pay out high dividends but is predicted to generate the highest dividend growth in Asia in 2016.

Jupiter Asian Income is also overweight developed countries such as Australia, Singapore and New Zealand relative to its benchmark.

Australia had struggled in recent times due to the economy's reliance on commodity prices and although it has staged a recovery in the past few months is still well valued. Holdings here include Sydney Airport (Aus:ASX), which should benefit from an increase in Chinese tourism.

There is no guarantee Mr Pidcock will be able to replicate his strong performance with Newton Asian Income, and there are some differences in the way he runs his new fund.

However, analysts at Chelsea Financial Services say: "We are confident that (Mr Pidcock) can repeat his previous performance at Jupiter. Jupiter Asian Income is very different to most Asian funds because it will have a greater exposure to more developed markets. It will also be slightly more concentrated and not quite as strict with its yield requirements, giving Mr Pidcock more flexibility. We think both these differences are positive."

So, although this fund is new, it has a proven manager with what looks like a good strategy, meaning it should be a good way to earn income while benefiting from defensive Asian equity exposure. Buy.

*Estimated yield from company fact sheet

Source: Morningstar, as at 4.10.16

Source: Jupiter, as at 31.08.16

Source: Factsheet, as at 31.08.16