Investing for income – Unlocking Asia’s dividend potential

For investors seeking a diversified income stream and are attracted to the potential of dividend growth offered by companies in the Asian peninsular then the Newton Asian Income fund is worth a closer look. The current yield of the fund at the time of writing is an attractive 4.44%, with income paid quarterly.

Newton, who are based in London and have over 30 years’ experience, are well known for their distinctive approach to global thematic investing with a strong focus on extensive proprietary research. The Newton Asian Income Fund was launched in 2005 and seeks to generate income for investors together with long term capital growth through a concentrated portfolio of shares in companies based in Asia, excluding Japan, but including Australia and New Zealand. The fund has no sector or country constraints and invests in stocks in both developed and emerging Asian economies. The investment team at Newton led by Jason Pidcock who has 19 years investment management experience have a constantly evolving approach that anticipates change and identifies opportunities. The fund typically invests in companies that are cash generative with high dividend yields.

For investors looking for good income diversification the Newton Asian Income fund provides concentrated access to Asian companies that demonstrate stable growth characteristics. The fund’s focus on sustainable dividends backed up by a strict yield discipline has given the fund resilience in times of difficult market conditions although past performance is not a guide to future performance. The Newton investment team believe that dividends encourage companies to have a disciplined capital allocation approach when it comes to the generation of cash flow. The fund invests in some of the fastest growing economic regions in the world due to local and global demand. The Newton investment team structure encourages lateral thinking and fluid communication with swift implementation of ideas.

The fund size at the time of writing is just over £4 billion with 69 holdings. The fund is constructed holistically using a research driven bottom up process investing in attractively priced companies with good prospects and fundamentals. The fund manager follows a strict income yield discipline and seeks to ensure that the fund yields at least 35% more than the FTSE All World Asia Pacific excluding Japan Index. At the point of purchase of any company holding the prospective yield must be greater than the index. Any company holding where the prospective yield falls below a 15% discount to the index is sold. In this respect the fund typically invests in good quality, cash generative companies with reliable dividend yields.

For more information on this fund see the latest Newton Asian Income Factsheet.

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Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements so  remember that you may not get back your initial investment. No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with this fund. Many funds have specific risks that apply to them and you should ensure that you read the Prospectus and the Key Investor Information Document prior to making any decision to invest. If you are at all unsure of the suitability of a particular investment/product, both in respect of its objectives and its risk profile, you should seek independent financial advice.

 

Income yields quoted are correct as at 17th July 2013.

Written by Oliver Roylance-Smith ,
19th July 2013