Australia is one of the most underappreciated markets and too many investors are overlooking it, argues Jupiter’s Jason Pidcock, who is launching his Asian Income fund next week.
The manager, who previously ran the Newton Asia Income fund and joined Jupiter in 2015, is focusing on big, liquid companies across the Asia Pacific region.
Among his favourite markets is Australia, where the fund has the largest exposure at 38 per cent.
Pidcock says the country is one of the “most underappreciated”, and says most of his fund managers peers have “a lazy approach” to the nation.
He says: “Australia has a 2.2 per cent GDP growth, retains a AAA sovereign rating with many international companies investing in the country.
“Also, the Aussie dollar has been the only currency that was up against the US dollar since September and it was also stronger than the sterling for the same period.”
Pidcock, who has been investing in the Asia Pacific region for more than 20 years, says the main Australian index has been under a lot of pressure because of the downturn in the mining sector, but apart from that earnings growth is very stable and companies are not cutting dividends.
In terms of sectors, in the new fund Pidcock will focus on insurance and telecommunication stocks, infrastructure and commercial property and will avoid any mining and energy stocks.
The fund manager will also focus on the Philippines, which he believes “could overlay India” and where he will mainly invest in healthcare and infrastructure companies.
He says: “The Philippines have low debt levels, as well as a young growing population. Japanese and US companies can feel more confident in investing here.”
While the fund will initially have more exposure to developed markets, it will gradually introduce emerging economies into its portfolio.
The Jupiter Asia Income Fund will be benchmarked against the FTSE All World Asia Pacific ex-Japan index. The retail shares class for the portfolio carries an ongoing charge of 1.84 per cent.