Pidcock says the New Zealand government failed completely when it reneged on an agreement with leading telecommunications provider Chorus on pricing for its copper broadband service, following pressure from the regulator. Chorus, which makes up a small percentage of the £4.4bn Newton fund, fell nearly 50 per cent in November.
"When we think of New Zealand, most people would probably associate it with rugby, lamb or dairy products, or perhaps even Brendan Cole from Strictly Come Dancing. For me though, I now have to associate New Zealand with political risk," he said.
"It’s very similar to reducing the coupon on a government bond, it really has caused a lot of upset in the investment community."
The manager says this one-off event is responsible for much of the short-term underperformance from Newton Asian Income, which fell 6.44 per cent in November.
The move has sent tremors through companies in New Zealand, with many in Pidcock’s portfolio tumbling in the aftermath.
"Many other share prices have been affected in the wake of this, unfortunately including our other holdings," he said.
Utilities Meridian and Mighty River Power took a hit, as did Pidcock’s holdings in Telecom New Zealand and Z Energy.
As a result, the manager is cutting his exposure to the country and does not expect to re-enter it at any point in the near future.
"This is a shame because [New Zealand] ought to be a developed and stable country. Many stocks there are yielding quite a lot," he said.
The fund has also had a difficult period over the last 12 months, as emerging economies have severely lagged the performance of their developed counterparts.
The Newton Asian Income fund has made just 2.6 per cent over the last year, trailing the IMA Asia Pacific ex Japan sector and FTSE Asia Pacific ex Japan index, which are up 5.38 per cent and 6.22 per cent, respectively.
Performance of fund vs index over 1yr
Source: FE Analytics
However, Pidcock still sees extremely good value in the region and even invested more of his own money into the portfolio at the end of August.
"Personally, I bought more on 28 August," he said. "The share price is even lower since then. When I look now I think [the fund] is ready for a period of outperformance."
The manager adds that the divergence between emerging market and developed market indices is a short-term phenomenon that is unlikely to last much longer.
"Correlations in equity markets are actually fairly high globally. If developed markets are going up, it would be unusual to have a prolonged period where emerging markets are going down," he said.
Over the longer term, the Newton Asian Income fund has been one of the best portfolios in the sector, outperforming over three and five years.
The fund has made 159.46 per cent since launch in November 2005, compared with 112.91 and 126.22 per cent from the sector and index, respectively.
Performance of fund vs sector and index since launch
Source: FE Analytics
Perhaps more importantly, particularly for income investors, is the fund’s dividend. Newton Asian Income is currently paying out 4.87 per cent, making it the third highest-yielding fund in the sector behind Schroder Asian Income Maximiser and Henderson Asian Dividend Income.
In terms of other areas of the Asia Pacific, Pidcock remains positive on the outlook for Australia and says he is also warming to companies in China as sweeping reforms boost their prospects.
"I don’t feel we should pile into Chinese companies because of these reforms… but over the medium-term, that does make us more comfortable and more importantly it’s good for the region as a whole," he said.
The manager is steering clear of India, but not because there are no opportunities in its struggling economy.
"There is a huge amount of low-hanging fruit in India, but it is a very low-yielding market. We have a zero weight because we simply can’t find companies we like with a high enough yield," he said.
Although the fund has had a difficult month, the manager says there is some good news as well: its largest holding, gambling conglomerate Sands China, has been one of the best performers in the region year-to-date.
Pidcock is backing financials and telecommunications, media and technology companies in his 70-stock portfolio, with the Pacific Basin making up the majority of the regional weighting.
Newton Asian Income requires a minimum investment of £1,000 and has ongoing charges of 1.16 per cent.
