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Newton Asian Income awarded 4 stars
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Henderson Asian Dividend Income Downgraded to 3 stars
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Rating downgraded
Henderson Asian Dividend Income Downgraded to 3 stars
This fund is part of the small but growing area of Asian funds that aim to provide income return in addition to the capital returns that many believe are the be all and end all of Asian investing. In fact, dividend provision in the region has grown in prominence over the last decade.
In 2010, 26% of stocks yielding more than 3% in FTSE World index were in the Asia Pacific region excluding Japan, more than any other region.
Relative to his peer group, the manager Mike Kerley has been more aggressively positioned, with overweight exposure to China and underweight exposure Australia. The manager is also holding Chinese banks, which is something of a rarity at the moment, and in my opinion is a key differentiator for this fund.
Unfortunately, over the last couple of years the manager has been caught out by some wrong calls, most recently taking a view in early 2010 that inflation in the region would remain benign with monetary policy staying soft as a result.
Having taken significant positions in interest-rate sensitive stocks, the fund suffered with the subsequent inflation shock and the aggressive measures taken by authorities to bring inflation under control. The manager still believes that Chinese banks will recover, and is maintaining these positions.
View the manager of the month section
Confidence in the manager has been somewhat eroded and his current positioning does not sit comfortably with our house view. As a result, this fund is downgraded to 3 stars. This has now been replaced as our favoured Asian equity income fund by Newton Asian Income.