Investors rarely look to Asian stocks for income. "But it's not that difficult to find them," says Jason Pidcock, manager of the Newton Asian Income fund. The FTSE All World Asia (Ex Japan) index yields 2.7%, "and we look for stocks that yield more than that. There are literally hundreds to choose from"." With the fund yielding 4.9%, and up 62% over one year, he seems to be doing a good job.
Guided by themes such as rising domestic consumption and population growth in the East, Pidcock "will only consider a stock if its prospective yield is 35% higher than the FTSE AW Asia Pacific ex-Japan Index", says Andy Parsons at the Share Centre. Current favourites include CNOOC, the Chinese state oil company, and Macquarie Airports, which yields 9.5%. Its biggest asset is a large stake in Sydney airport, but it also owns parts of Copenhagen and Brussels airports. "Flight numbers to Sydney will continue to grow and it has recently refurbished the airport so retail sales will be better."
Pidcock is also taking an interest in high-yield, low-growth companies, such as telecoms stocks, which are yielding 8% but have underperformed the index this year. "If we get an 8% dividend yield and they offer 5% earnings growth plus we get some currency growth, we could see a 15% annual total return."
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"Historically, investors have been reluctant to seek income from regions they are unfamiliar with," adds Parsons. However, for those prepared to accept some risk, the potential for an attractive income yield and the possibility of growth mean Asia and the Newton Asian Income fund should not be overlooked.
Contact: 020-7163 2802.
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NewtonAsia Income top ten holdings
| Macquarie Korea Infrastructure Fund | 6.4 |
| Telstra Corporation | 5.7 |
| CNOOC | 5.0 |
| APA Group | 3.7 |
| QBE Insurance Group | 3.3 |
| Keppel Corp | 3.3 |
| Hong Kong Land Holdings | 3.2 |
| Advanced Info Service Public Co | 3.2 |
| AMP | 3.2 |
| Macquarie Airports | 3.0 |
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