Following a ‘star’ manager after their exit from the fund or firm that made them a well-known name can be a risky business but also a potentially rewarding one. 
Take, for example, those that followed Neil Woodford upon his departure from Invesco Perpetual to start his own businesses, who are no doubt pleased he has – so far – remained consistently at the top of his sector.
Next week will see the launch of the Jupiter Asian Income fund managed by Jason Pidcock, whose previous Newton Asian Income portfolio had many fans owing to strong income credentials and decent returns over his decade-long tenure.
Pidcock (pictured) joined Jupiter from Newton in May last year, having managed the group’s now £2.2bn Asian Income fund since 2005.
FE Analytics data shows that he made 184.03 per cent during his tenure on the fund, compared with 169.69 per cent from its FTSE Asia Pacific ex Japan benchmark and 151.98 per cent from its IA Asia Pacific ex Japan sector.
Performance of fund vs sector and index under Pidcock
Source: FE Analytics
However, our data also shows investors have been jettisoning their exposure to Newton Asian Income over the past year with £2.1bn flowing out of the portfolio over the past 12 months.
Clearly, this could be partly due to the China-led crisis that started to unfold around this time and is far from abating today, in addition to the high-profile management change.
Ben Willis (pictured), head of research at Whitechurch Securities, was one such investor to pull cash from Newton Asian Income last year.
“We invested with Pidcock at inception when the Newton Asian Income fund was launched and so he has proven a very good manager over the long term,” Willis said
However, Willis like others was somewhat concerned that the fund’s rapid growth to more than £5bn of assets under management might hampering performance.
“Prior to his departure from Newton we had become concerned about the fund size and so when it was announced that he was leaving, this provided the impetus for us to sell – though the fund has held up well relatively since Pidcock left.”
Indeed, 2015 proved to be the worst period for the fund relative to its peers in the IA Asia Pacific ex Japan sector with the portfolio sitting bottom quartile for the first time since 2007, losing 8.07 per cent.
Willis, who switched his cash into Schroder Asian Income Maximiser, has not got any plans yet to buy Pidcock’s new fund, which will target more large and mega-cap exposure, but he may do so after a period of scrutinising its performance.
“There is no clear rational for selling Schroder Asian Income Maximiser and moving into Pidcock’s new venture; however, the Jupiter Asian Income fund will be monitored closely,” he added.
Hargreaves Lansdown head of research Mark Dampier is more upbeat and has decided to buy the fund at launch for his own personal portfolio.
“Jason has an excellent record in this area and it allows me to access a higher growth area but get a dividend too. Asia has had a hard time so you’ve not buying the region at a high, but mine is more of a fund manager call,” he said.
Pidcock says – perhaps unsurprisingly – that now is the perfect time to be investing in Asia ex Japan due to depressed valuations.
“There is clearly a good time to be launching, markets are a lot lower than they were nine or 10 months ago and valuations look have come off quite a bit. There is some unease about parts of the region – particularly China – but at least that is now well flagged,” he said.
“More recently currencies have actually firmed quite a bit and I’m now feeling much more confident from a total return point of view.”
Performance of index over 1yr
Source: FE Analytics
Adrian Lowcock, head of investing at AXA Wealth, says while Asia is out of favour at the moment rarely has he seen a manager so bullish as Pidcock. However, he like Willis is also waiting on the side lines.
“I am glad to see the return of a good manager and believe investing in Asia for income is a good long-term strategy for investors, but I am keen to see evidence that Jason Pidcock is able to replicate the success he has had previously and is able to deliver performance. It would be wise to wait and see how he settles down in his new role,” he said.
“Pidcock is a very experienced manager with over 20 years of investing in Asia. He doesn’t follow benchmarks but instead is looking for companies with strong management and the ability to pay a sustainable and growing dividend.”
“He tends to prefer developed Asian markets over emerging Asia, which should help reduce volatility but could impact on long-term growth. He has a preference for Australia and looks set to maintain this in his new fund.”
Australian stocks have taken a battering, irrationally says Pidcock, due to the decline in sentiment to mining sector which makes up a hefty chunk of the index.
Performance of index over 3yrs
Source: FE Analytics
The manager says Australian stocks will be a considerable overweight in the fund.
Lowcock also adds that Pidcock will not be replicating entirely the process of the Newton Asian Income fund.
“At his previous place there was a strong company culture where global themes were identified which drove investment ideas. There was also clearly a team which supported Jason in his role,” he said.
“Whilst at Jupiter each manager is encouraged to be their own person and are free to have their own investment philosophy so it will be interesting to see what that brings. In addition, he will be building up an Asian team from scratch which requires a different set of skills and brings with it many challenges.”
Rob Morgan, pension and investment analyst at Charles Stanley Direct, says this is one reason he is also holding back to see if this works for or hinders the new fund.
“I think it is worth considering given Jason Pidcock's record in the area; the only reservation being less analyst support at Jupiter compared to at Newton. I still expect him to do well though.”
Dampier, however, disagrees. He said: “The fund was ‘his’ at Newton’s so I see no reason why it isn’t business as usual.”
The fund will be launched 2 March 2016. For more details on the fund, FE Trustnet took a look at the in-outs and outs of Pidcock’s portfolio last week.
