Advisers name their top Asian income picks

A trio of advisers reveal which products they use for their Asian income exposure.

As investor appetite for income intensifies, the search for yield has widened and interest in global and regional income funds has grown. Asian income is one area gaining particular attention, thanks primarily to a rising dividend culture. Here, three advisers explain why they like Asian income funds and which products stand out from the crowd.

Adrian Lowcock

Senior investment adviser, Bestinvest

Asia is fast becoming one of the mainstream alternative regions for income investing; domestic investors like receiving an income from their investments as they take a more cautious approach to saving money and corporations have significantly improved their governance since the 1998 Asia crisis.

However when searching for income we are looking for managers who are more conservative in the region, so looking at companies which already produce an above average yield and tend to invest in the more developed markets.

So we look for funds where the manager identifies companies with a good yield and yield growth prospects. Stocking picking skills are an important part of performance in Asia as active management can really add value.

We like Jason Pidcock of Newton Asian Income – performance has been very good and consistent over the short medium and long term. Yield is 5.5% and we can expect this to continue to grow. Pidcock ticks all the boxes we want in a manager in the region.

Andrew Merricks

Head of investments, Skerritt Consultants

The Asian regions are not suffering from the same problems as the developed world. For example, equity income investors were knocked for six when banking giants Lloyds and RBS chopped their dividends in 2008 as the banks were historically big dividend players; then less than two years later, BP cut its dividend completely.

As regions, Asia and emerging markets are still developing. Their populations are a bit younger so there is more scope for successful companies to make more money and then reward investors through growing dividends. For that reason, it is more opportunistic to look at those regions rather than the standard steady eddies.

We hold the Newton Asian Income and Schroder Asian Income Maximiser funds, which yield 5.5% and 4.4% respectively.

Simon Lander

Director of financial planning, CamOuse

We have recently added the Newton Asian Income fund to our portfolios. The manager, Jason Pidcock, is looking for high yielding stocks in the region so it delivers what it says it is going to do. We do, however, think the fund is a little high risk for some of our clients than other alternatives.

We also use the Investec Emerging Markets Local Currency Debt fund for Asian exposure because we like the ethics of the fund and we like that it is specifically emerging markets.

Although it is high risk, we think it is good to diversify away from UK funds. It holds both sovereign and corporates in emerging markets and it has a sensible yield for what it is trying to do, so clients are compensated for the risk they are taking for having the fund in their portfolio.