“When I launched the Newton Asian income strategy in 2005, which was one of the early Asian income funds, I bought companies I still owned nine-and-a-half years later when I resigned.
“Some of the companies I’ve bought into now, I would expect to own in five or 10 years’ time.”
Pidcock has been involved in selecting stocks in Asia for their income producing ability since he joined Henderson Investment Management in 1993, where he worked as an assistant to the fund manager of an Asian income fund for three years.
From 1996 he was a fund manager at BP Investment Management until 2004, when he became director of investment management and head of Asia-Pacific equities at Newton Investment Management. Here, he led the firm’s Asian equities team and was a member of its equity strategy group.
Trusting in Asia
Pidcock joined Jupiter as a fund manager towards the end of last year, specifically to launch an Asian income fund, a move that was first realised with the launch of the unit trust in March 2016 and then the Sicav version on 29 June.
His 23-year history of investing in Asian stocks is made all the more surprising for his lack of a relationship with the region.
“I’ve never lived there, can’t speak any of the languages and don’t have any particular affinity with the region,” he says. “The only reason I am investing there is because I think it’s a good part of the world to invest in.”
The new Luxembourg-registered Sicav fund, which has only been going for a couple of months, has a minimum yield currently of around 3.7% and is expected to settle somewhere around 4%.
“We think that is a pretty good number. It’s appealing and attractive compared with a lot of asset classes, but it’s not set so high that we have too many constraints.”
Pidcock says his investment portfolio, which benchmarks against the FTSE All World Asia Pacific ex Japan index, is currently biased towards the more developed markets of the Asian region – mainly Australia, New Zealand and Singapore, with some representation in Malaysia, Thailand, South Korea, Taiwan and Hong Kong.
“My main emerging market overweight is the Philippines,” he adds.
For a region dominated by China, Pidcock only has one Chinese company, which is listed in Hong Kong. His view on China is that even if the country’s growth rate was to keep falling and reach lower levels of around 3.5 or 4% a year, it would not necessarily be bad for other countries in the region.
“In a funny way, some countries in the region may benefit, and arguably already are benefiting, because of the lower commodity prices we have seen as a result of China’s slowdown. Countries that you could argue have been a little bit crowded out by China, can now buy necessary commodities to use in essential infrastructure investments at a lower price,” he says.
“Places such as the Philippines, Thailand and India are likely to spend more on infrastructure, which will have quite a multiplier effect because there are bottlenecks in those countries and I don’t think that they have too much to fear from a slower China.”
Commodity benefits
The Chinese slowdown and the easing it has engendered in commodity prices has had little impact on Pidcock’s heavy weighting to Australia because he does not hold any mining companies.
“If there was another lurch down in commodity prices, the mining companies probably would see their share prices fall pretty sharply after the run they’ve had,” he says.
“Equally, if commodity prices go up, I’ll benefit via the Aussie dollar, even though I do not own the mining companies.”
