Jupiter Asian Income I GBP Acc
Why is this fund on our radar?
An investment into Jupiter Asian Income would give investors exposure to a concentrated portfolio of equities focused on Asia’s more developed economies. The manager, Jason Pidcock, primarily looks for larger companies, that are leaders in their industry with defendable positions, that are less susceptible to competition. He looks to hold around 30 companies, with the aim that the portfolio yields around 20% more than the Asian index. The focus on developed Asia means the portfolio is likely to offer a differentiated source of income to more traditional geographies, like the UK whilst still providing an above market yield, which at present is 3.6% versus the market’s 2%.
Jason is highly experienced and has a proven track record for this strategy over many time periods. Our scoring system ranks the fund top of its sector for batting average, demonstrating the fund has outperformed in a high percentage of periods.. Moreover, the fund scores second in the peer group for ‘alpha’, a measure used by analysts showing its ability to outperform versus a wide peer group, despite having an income focus which can often act as a headwind versus peers that are solely focused on high growth returns.
Skip to Our VerdictPerformance
The manager, Jason Pidcock, is primarily focused on finding companies in developed Asian economies such as Singapore and Hong Kong. This starts with a top-down approach, looking at where he wants to be invested, before finding top quality companies within these areas to purchase. The type of companies he invests in tend to be well-established and market leaders in their respective industries, and that are paying sustainable dividends. As such, the fund has tended to perform best in more challenging markets, as his holdings tend to hold up in these periods because of their strong market positions and solid balance sheets.
On the other hand, there are periods when markets could be doing particularly well and are being led by more speculative, or higher growth companies in which the fund is expected to struggle to keep up. Over the course of the cycle though, Jason has proved that protecting in weaker periods has produced superior total returns.
Jason has flexibility in his investment approach, and can avoid themes and industries entirely if he doesn’t see opportunities that meet his criteria. This can lead to periods where the fund performs very differently to a comparative benchmark, especially if an area he is not invested in has notably different performance to the rest of the region. One example of this was China’s weakness in 2022-2023,a period where Jupiter Asian Income did particularly well relative to the market as a result of its low allocation, managing to deliver positive returns in a weak market.
Five year performance
Source: Morningstar
Past performance is not a reliable indicator of future results
As a result of the manager’s defensiveness, the fund has historically had a market beta of between 0.8 and 0.9. Beta is a measure of sensitivity, and this score means that for every 1 point move in the wider market, the fund should only move by 0.8-0.9; simply put, if the market wobbles, the fund wobbles less.. This comes despite the fund having a concentrated portfolio at c. 30 names, which could be seen as higher risk, especially with some of the sizeable positions in some stocks, although the portfolio construction approach means that Jason is very conscious of risk management when compiling his best ideas together in the fund.
Portfolio
Jason’s approach starts with a top-down analysis of his investment universe, meaning he looks at which countries and industries he wishes to invest in first, before then focusing on which companies are best within this.
This has led to a bias towards the region’s more developed markets, such as Australia, Singapore and Taiwan as they typically have more mature, dividend paying companies, and are in jurisdictions with a strong rule of law to protect shareholders. As such, the portfolio is likely to be heavily focused towards these countries and, at the same time, is likely to be underweight some of the less developed countries in the region. One potential exception to this is China, which Jason has typically steered clear of due to the level of state-ownership and intervention in markets. However, he does typically hold several companies in Hong Kong which offers similar exposures.
geographic exposure
Source: Jupiter Asset Management
To identify potential holdings, Jason undertakes rigorous analysis on a company’s fundamentals and industry position, looking for those that are leaders within their sectors with defensible positions. As such, the portfolio tends to be focused on larger companies.
When it comes to generating income, not every stock will have to pay high dividends, although Jason wants to build a portfolio that yields at least 20% higher than the market, reflected in the current yield of 3.6%, versus the broader market’s 2%. To achieve this he will look to blend a mixture of those paying higher yields with those that exhibit income growth potential. The portfolio is concentrated at c. 30 stocks, meaning Jason takes a strict approach to risk-management, ensuring he is only taking exposure to risk factors once with each stock pick.
Our Verdict
We believe the process behind Jupiter Asian Income is one of its key differentiators. Manager Jason Pidcock starts with a top-down approach, looking to identify countries he does and, importantly, doesn’t want to invest in, which stands in contrast to most active funds in the region which have a bottom-up approach. This is likely to result in a portfolio with a different profile to other options in the region.
As a result, the fund is likely to offer investors considerable diversification benefits to not only other Asia funds, but also to income portfolios more broadly, as the drivers behind the fund’s portfolio of large-cap, developed Asia companies are likely to be very different to more traditional income areas such as UK equities and bonds.
Furthermore, Jason’s straightforward approach has delivered a strong track record of returns, particularly in more challenging times with good downside protection. Asia is often considered a riskier investment area versus other geographies, therefore Jupiter Asian Income could offer investors access to the many attractive opportunities whilst dampening the potential risk.
Key Risks
- Developed Asia bias could mean countries with strong growth potential are overlooked
- Portfolio is highly concentrated with just c. 30 holdings which adds single stock risk
- Lower risk approach means fund could lag in sharply rising markets
