Aim: Income and growth by investing in the Asia Pacific ex Japan region including Australia and New Zealand
Minimum investment: Lump sum 1,000, monthly 50
Investment split: 27.2% Australia, 19.6% Singapore, 17.1% Hong Kong, 13.2% Taiwan, 6.9% Korea, 6.5% Thailand, 6.2% Malaysia, 3.3% Philippines
Isa link: Yes
Pep transfers: Yes
Charges: Initial 4%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 0500 660000
Newtons Asian income fund is an Oeic which invests in the Asia Pacific ex Japan region including Australia and New Zealand
Putting this fund in its geographical context Hargreaves Lansdown senior analyst Meera Patel says: Asia has traditionally been known for its capital growth opportunities but with improving corporate governance and more emphasis placed on shareholder value, companies are now willing to offer dividends. In a low growth, low inflation environment, this is definitely a step in the right direction.
Patel notes that in terms of total returns, many investors like having income and provided this can be sustainable, she feels this fund offers an excellent way to exploit income opportunities within Asia together with capital growth prospects.
The fund aims to offer a yield of 4-4.3 per cent, which is pretty attractive. says Patel. Putting risk factors aside, this is higher than the rate of interest on the majority of deposit accounts in the UK. The quarterly income distribution is also appealing.
Patel also likes the fact that there is a strict yield discipline. The funds aim is to yield 35 per cent in excess of the index. Holdings where the prospective yield falls below a 15 per cent discount to the index will be sold. This ensures that the fund will always aim to offer a yield in excess of the market, she says.
According to Patel, a fund like this would fit in extremely well with other equity income funds, providing diversification away from UK equity income. The manager has a decent track record running Asian equities and together with Newtons thematic approach, its prospects look bright, she says.
There is little Patel dislikes about the product. But as a word of caution she says: Investing in Asia can be higher risk and a fund like this should make up a small proportion of an individuals portfolio. For example Asia should not make up more than 10% of an overall portfolio. In addition, this must be bought with a long term horizon in mind, at least 10 years or more.
She also points out that another risk is currency movements which could potentially work against the investor. For instance, if Asian currencies move in directions that are detrimental to the UK investor, this could also adversely affect the amount of income investors may receive.
In terms of possible competitors Patel suggests the First State Asian Equity Plus Fund, an offshore Asian income fund that she reagards as the nearest competitor. There is also the Schroder Oriental Income Fund but this is an investment trust rather than an Oeic or unit trust. says Patel. I expect to see more funds of this nature launching on the market over the coming year or so competition is likely to get tougher.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average