After a 10-month break from running money, Jason Pidcock is preparing to return to fund management on March 2 with the launch of the Jupiter Asian Income fund. His enforced hiatus follows an 11-year stint at BNY Mellon-owned Newton Investment Management.
By the time he resigned his position at the firm in May last year, his Newton Asian Income fund had reached £4.4bn in size. It has since seen outflows of £2bn, which suggests investors are preparing to follow Mr Pidcock to Jupiter Asset Management. However, he is quick to point out he has only met investors in his former fund who have requested to see him.
He explains: “A lot of the investors that have asked to see me are actually underweight Asia, so quite a bit of the money coming in will be money being redirected to Asia. People who are now a bit more willing to go to a neutral position having been underweight for some time because valuations look more appealing than they did nine months ago, so I actually think that will be a reasonable chunk of it. There might be new clients who didn’t invest with me previously and there could be people who switch out of other funds.”
Indeed, at the time of this interview in mid-February, Mr Pidcock had his own application form for the fund on his desk, “ready to be posted”.
“I’m going to be putting a lot more of my own money in this fund than I ever have before,” he says, in a vote of confidence for investors in his new strategy.
The manager is the first to acknowledge his timing is fortuitous, “having now had nine months of market declines behind me, I think it’s difficult to think of a better time to launch the fund”. But he admits to feeling cautious on markets – China in particular – at the time he left Newton.
“I felt if I was going to move, that would be a reasonable time to make the switch,” he suggests. “I resigned on May 11, which was very close to the top of the universe that I cover and indeed global equities. Obviously I was very aware that I was managing a lot of money on behalf of a lot of people. But I don’t change a lot, I’d been at Newton for 11 years so it’s not something I do regularly but I felt it made sense to come somewhere where I was much more comfortable and if investors choose to follow me then great.
“That’s the beauty of an open-ended fund, people are able to take their money out if they choose to do so, they’re not trapped,” he adds.
So which came first, leaving Newton or joining Jupiter? Mr Pidcock replies: “I started thinking about what kind of company I really wanted to work for and hopefully seeing out the rest of my career at, and so I did think about style of management, corporate structure, growth prospects, the people that I would be working with.
“I already knew a number of people here at Jupiter. I like the fact that it’s independent, it’s British listed, it doesn’t have a parent company, it is growing – there is a real sense of dynamism here.”
He continues: “The style here works for me, and the independence that we’re given. I think chief executive Maarten Slendebroek is very focused, doing a great job and his energy radiates throughout the firm.”
Significantly, Jupiter’s Asian equities offering was less well established than those focusing on other regions. There will, however, be some crossover with Jupiter’s emerging markets team headed up by Ross Teverson, formerly of Standard Life Investments.
Mr Pidcock notes: “My strategy will have a developed market focus, but focusing on Asia Pacific ex Japan countries, so there’ll be some overlap with his team, some overlap with the global investors [Stephen Mitchell, Stuart Cox].
“So there’s a lot of overlap, but with my strategy the buck stops with me, and I guess what I’m bringing in is 22 years of knowledge and experience investing this way in this region.”
Mr Pidcock’s investment process will seek out 40 to 50 holdings for the portfolio. “I estimate my universe is about 200 companies, and these are typically large cap, liquid, higher yielding stocks, with a few low-yielding stocks where the dividend will be growing more quickly,” he says.
“I don’t describe myself as top-down or bottom-up, I think it’s a mixture of the two. So I like to get to know the companies and have an understanding of the macro environment they’re operating in.”
He describes many of the stocks in his new fund as being in “steady state” sectors, such as telecoms and utilities. “I particularly like the healthcare sector, and this is a sector I’ll be able to invest in more easily in this fund than my previous fund because the yield discipline is more flexible,” he says.
He favours domestic consumption stories, a theme he is finding in markets like the Philippines.
“One of the team recently was in South-East Asia,” he remarks. “Charles Sunnucks went to the Philippines, Malaysia and Indonesia, so obviously before he went I gave him my view on the companies he was meeting and a list of questions for those that I’m most interested in, and I was delighted he came back with a similar feeling on the Philippines that I have, which is that it’s likely to grow faster and outperform neighbouring countries.”
When Mr Pidcock left Newton, his Asian Income fund had underperformed on a one-year view. He attributes this to being underweight China in the portfolio on the basis he was anticipating a sell-off but did not know when it would come. At that point, the Chinese economy was still on an “upward trajectory”, he recalls. Growing doubts about China’s ability to grow at the same pace have made the manager nervous, but he is not averse to some exposure to the country.
“I’m quite cautious on China for now, but it remains the largest economy in the region and there will be stories there that are very exciting, even if the overall market doesn’t grow as quickly as it used to,” he concedes. “And I think you can’t invest in the region without having exposure to China, it is the biggest economy.
“But I will be underweight compared to some of my peers because I have more exposure to places like Australia and New Zealand than I think some of my competitors have.”
Mr Pidcock believes the Asia-Pacific region has a good dividend-paying culture, highlighting the average dividend ratio of 40 per cent across the region for the past 15 years.
“[Considering] the ones I’ll be investing in, clearly the average for my portfolio will be higher than that but there’s plenty to choose from,” he adds. “There’s a lot of companies that have a long track record of paying dividends.”
But he does warn average payouts in India and South Korea, which have been growing at around 1 per cent a year respectively, could begin to slow.
Looking ahead, the manager is circumspect on the ultimate capacity of his new fund, despite his previous portfolio having ultimately swelled to a size that made some investors nervous.
He reiterates the large-cap and liquid characteristics of the holdings in the portfolio.
“Certainly I think the fund as it stands on day one would be able to accommodate at least the amount of money my previous fund was when I left it, which was £4.4bn. I think the new strategy can be bigger than that. I wouldn’t want to give a maximum number because we might be many years away from testing that, if ever.
“But it could be, if people want to put money in, very sizeable.”
CV
Jason Pidcock
December 2015 – present
Jupiter Asset Management
2004 – 2015
Manager, Newton Asian Income fund, Newton Investment Management
1996 – 2004
Fund manager, BP Investment Management
1993 – 1996
Assistant fund manager, Henderson Investment Management
