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Newton offers income with spice

Newton has brought out the Newton Asian income fund, an Oeic which has an initial target income yield of 4-4.3 per cent and also offers the potential for capital growth.

The fund will combine the investment strategies of two existing funds Newton higher income, which has a strict approach to income yields, and Newton oriental, which has a global thematic investment style.

The new fund will be managed by Jason Pidcock and Zoe Kan, the etam behind the Newton oriental fund. Pidcock heads up Newtons Asia Pacific ex Japan team and has over 12 years experience of investing in the region. He currently runs five funds, including Newton oriental and its offshore version, Mellon Asian equity portfolio. Kan has five years experience of the region with the Newton team.

Stock selection will be driven by themes and there will be a strict buy and sell discipline based oin prospective yields. To make it into the portfolio a stock must yield more than the FTSE AW Asia PAcific ex Japan index and good growth prospects. Once it is included, a stock must maintain its high yield and will be sold if falls more than 15 per cent below the index. Ultimately the fund will aim for a dividend yield of at least 35 per cent greater than the index.

As the stockpicking process is bottom up, allocation to each country will be the result of stock selection. Research will be carried out to deteermine which stocks will benefit most from the themes Newton has identified. The results of this are published on recommended stock lists which rank the companies from the strngest to the weakest.

The Asian equity team will select the best ideas from the list and after visiting the companies, it will construct and monitor the portfolio.

According to Newton, UK investors are too reliant on their home market when looking for income and this fund offers an alternative. With companies becomong more aware of the importance of dividnends, particularly in developing markets within Asia, this fund could do well. However, it is unlikely to attract interest from more cautious investors who are looking for income.


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