Newton Asian Income Fund

Andy Parsons, Advice team manager at The Share Centre, explains how investors looking to generate additional income while adding some spice to their portfolio, could benefit from the Newton Asian Income fund.

"Newton Income funds are well renowned for their focus on strong dividend growth. However, for many investors Asia would not be their first region of choice for income. Asia has predominately been seen as a region offering potential for significant growth, but recently the Newton Asian Income fund has proven the region is also attractive for income seekers.

"The fund's manager, Jason Pidcock, will only consider a stock if its prospective yield is 35 per cent higher than the FTSE AW Asia Pacific ex-Japan Index. To help reduce the downside risk of the portfolio, Pidcock will sell a share if its yield falls below a 15 per cent discount.

"Pidcock has managed the fund since it launched back in November 2005 and heads an Asian team of 18 who support him with research ideas. The fund typically invests in 45 to 55 shares, with companies being selected having taken the investment house view on global themes into consideration.

"Despite being a relatively new fund, the Newton Asian Income fund is already showing considerable promise. At the end of November 2008, the fund passed the all-important three year landmark. Plus, year-to-date it has returned an impressive 40.56 per cent, while yielding 4.97 per cent. The fund is currently rated as ‘A' by S&P.

"Historically, investors have been reluctant to seek income from regions they are unfamiliar with. However, for those prepared to accept the risk, the potential for an attractive income yield and the possibility of growth, Asia and the Newton Asian Income fund should not be overlooked."