Open-ended income-focused funds investing in Asia are rare, but Newton Asian Income Fund is a strong choice, having a Morningstar Superior rating and S&P 'A' status. The fund is a blend of two approaches, mixing a strict yield discipline with Newton's thematic investment approach to stock picking.
The fund comprises a concentrated portfolio of typically between 40 and 50 stocks, invested in all the major markets of the region, including China, Singapore, Hong Kong, Thailand, Malaysia, the Philippines, South Korea, Taiwan, Australia and New Zealand.
Fund manager Jason Pidcock has spent his entire 15-year career investing in Asia Pacific ex-Japan equities and is backed up by a strong team. The manager will only purchase a stock if its prospective yield is 35 per cent higher than that of the FTSE AW Asia Pacific ex-Japan Index. A stock is sold when its yield falls below 15 per cent of the index yield.
Given the fund's yield requirement Mr Pidcock finds some Newton themes difficult to play.
A principal Newton theme that he believes continues to support Asian equities is that of population dynamics (and urban population growth in particular). In Asia the urban population is growing by over 30m people per year due to continued mass migration from rural areas to the cities. As more people move to the cities and the level of car ownership increases, there is increasing pressure on road infrastructure. An area within the fund which draws directly on the theme of urbanisation is its investment in private toll road builders and operators, an example in the portfolio being Hopewell Highway Infra, the Hong Kong listed toll-road company with operations in China. The stock's performance has demonstrated the cash-generative abilities of companies in this sector.
| Newton Asian Income Inc | |||
| PRICE:* | 104p | SHARPE RATIO:* | -0.07 |
| SIZE OF FUND:* | £118.94m | 1 YEAR PERFORMANCE:* | -13.11 |
| No OF HOLDINGS: | 40-50 stocks | 3 YEAR (ANNUALISED) PERFORMANCE:* | 3.34 |
| SET UP DATE: | 30 Nov 05 | 5 YEAR PERFORMANCE: | n/a |
| MANAGER START DATE: | 30 Nov 05 | TOTAL EXPENSE RATIO:* | 1.69 |
| TURNOVER: | na | YIELD:* | 6.33 |
| VOLATILITY: | na | MINIMUM INVESTMENT: | £1,000 |
| TRACKING ERROR: | na | MORE DETAILS: | www.newton.co.uk |
Source: Newton and *Morningstar
TOP TEN HOLDINGS
| Holding | % |
| Telstra Corp Ltd | 6.07 |
| CNOOC Ltd | 5.4 |
| Taiwan Semiconductor Maufact | 4.13 |
| Taiwan Mobile Co | 3.95 |
| Advanced Info Service PCL | 3.56 |
| Philippine Long Dist Telecom | 3.46 |
| QBE Insurance Group Ltd | 3.43 |
| Standard Chartered PLC | 3.38 |
| HTC Corporation | 3.35 |
| APA Group | 3.34 |
GEOGRAPHIC BREAKDOWN
| Country | % |
| Australia | 23.7 |
| Hong Kong | 19 |
| Singapore | 15.6 |
| Taiwan | 15.3 |
| Thailand | 7.2 |
| Philippines | 4.7 |
| United Kingdom | 3.4 |
| Others | 11.2 |
