Investors just don't get Australia says blockbuster manager
Citywire AAA-rated Asian dividend specialist Jason Pidcock says investing down under isn’t just about China.
by Chris Marshall on Nov 09, 2012 at 07:01
Investors don't understand Australia and concerns over growth in the commodity rich nation are overstated, according to Jason Pidcock, manager of the $3.19 billion Newton Asian Income fund.,
Amid concerns about the slowing Chinese economy, the Citywire AAA-rated manager said investing in Australia is about much more than merely seeking a proxy for demand from the country's biggest customer for iron ore, coal and other commodities.
‘As investors around the world continue to seek income we think they will increasingly look to Australia. We think Australia is mis-understood by a lot of investors. If anything our weighting to Australia is likely to go up rather than come down.’
In his dividend-seeking strategy, Pidcock has taken a slightly overweight position to Australia. This accounts for 26% of the fund.
He also disputes claims that the Australian dollar is set for a fall, a view that has seen some fund managers and currency experts short the country's currency.
‘Ninety nine per cent of people around the world feel the Australian dollar is overvalued. Therefore I remain confident that it’s going to hold up… the Oz dollar deserves to be strong, it is genuinely a hard currency,' Pidcock said.
Australia's exposure to the 'Asian growth story' is one of the reasons Pidcock remains confident in the country. Last year he had become more cautious towards China, but in October, when GDP data gave economists reason to believe the Chinese economy had troughed, he became ‘more neutral’ towards investing in China.
‘There is no reason for Chinese stocks to underperform anymore in the short term,’ he said. In fact in October, the Chinese stock market rose strongly after declines for most of the year.
‘Caution on China does not need to mean zero Aussie weighting. Domestic outlook is stable with flexibility to geographically diversify exports of commodities globally’, he says, reminding investors that Australia has the ‘safe haven status’ associated with a AAA sovereign credit rating.
Pidcock said that he had recently brought more shares in Anglo-Australian miner BHP Billiton, while Australia and New Zealand Banking Group is the top holding in the Asian Income fund.
The Newton Asian Income fund has returned 69.54% over the past three years. This compares to its Citywire benchmark, the MSCI AC Asia Pacific ex Japan TR USD, which rose 23% over the same period.
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