This has been one of our favourite funds, particularly attractive for its perceived to be more defensive income feature, offering a consistently high yield in excess of 5% due to the stringent income targets. The fund has a consistent strong long-term performance record. Despite the departure of the lead manager Jason Pidcock in May 2015, the fund is likely to be managed in a similar fashion to that of the past few years, regardless of the manager change, ensuring continuity. The co-manager Caroline Keen, who has worked on the fund alongside Pidcock since 2011, has remained with Newton and will continue to co-manage the fund.
The fund aims to achieve a high and rising income together with long-term capital growth primarily through investments in securities in the Asia ex Japan region (including Australia and New Zealand). As with other Newton equity income funds strict yield criteria apply to all securities in the portfolio. Stocks are identified that initially pay a prospective yield in excess of that of the reference benchmark, the FTSE AW Asia Pacific ex Japan Index. This reduces the investment universe from over 1,500 stocks to around 600. Any stock whose yield falls to a 15% discount to the benchmark will be sold. The manager identifies stocks that offer an attractive yield, and also those that are in a position to significantly grow their dividend over the medium-to-long term.