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.
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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
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