Trustnet Magazine Issue 21 September 2016 | Page 31

WHAT I BOUGHT LAST JUPITER ASIAN INCOME David Lewis reveals why the Jupiter Merlin team has returned to Jason Pidcock as it bids to take advantage of improving conditions in Asia W HEN YOU GET TO THE HEART OF WHAT WE TRY TO DO, it is investing in people that we believe are the best active managers in the market, in order to give our portfolios the greatest chance of outperformance. This is not all we do, however: we are also active on asset allocation and our views here can and do lead us to sell good fund managers from time-to-time. Nevertheless, if we believe they have the right skills, temperament and process to outperform, then they will never fall off our radar. In mid-2013 we turned more negative on Asian and emerging market assets, having held significant weightings to both the equity and debt from these sectors throughout the 2000s and during the postfinancial crisis years. However, in 2013 we believed these assets had become stretched and could struggle in the rising US dollar environment that we expected after the Federal Reserve ended its quantitative easing programme. This led us to sell down our Asian and emerging market exposure, a decision that subsequently paid off as these assets struggled versus developed world peers until 2016. From the turn of the year, with the backdrop of a more stable US dollar and lower valuations, we have become more positive on Asian and emerging market assets and have added to these positions across a number of our portfolios. Within the Jupiter Merlin Income Portfolio, where we had sold out totally, we needed to add a new fund to boost our Asian equity exposure. We chose a manager with whom we had invested prior to our 2013 concerns, that individual being Jason Pidcock. Since our sale of Pidcock’s Newton Asian Income fund on macro grounds, the manager has left his former employer and joined Jupiter, where he now runs a similar strategy. Jupiter Asian Income is large cap in nature, holding companies that have a focus on developed Asia and can provide a sustainable and growing dividend stream to their investors. We have often found that some of the best returns can be made by investing in funds that are small, nimble and growing, managed by talented individuals who have the drive and determination to succeed for their clients. We believe the Jupiter Asian Income fund and Pidcock’s personal style fulfill these criteria. Selecting these small, nimble funds is a challenging task when the manager and their strategy are both unproved and untested, requiring thorough analysis of the person, their process and the structure around them. Manager moves therefore can provide a fertile hunting ground, where we have already identified their talent and before they are encumbered by very large assets. David Lewis is a fund manager on the Jupiter Independent Funds team 29