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Newton’s Pidcock goes on buy spree as cash falls to 20bps

by Danielle Levy on Feb 26, 2014 at 14:47

Newton’s Pidcock goes on buy spree as cash falls to 20bps

Citywire + rated Jason Pidcock has taken the Newton Asian Income fund’s cash position to its lowest ever level after capitalising on valuation opportunities following the taper talk sell-off.

Cash in the £4.15 billion fund currently stands at a minimum level of 20 basis points after the manager opted to put cash to work from the autumn onwards. At this point, he felt the worst was over in terms of the sell-off that followed the Federal Reserve’s tapering announcement in May.

‘We did quite a lot of buying around autumn of last year. The cash level in the fund is very low now. It is basically at the minimum possible level because I think the value of the stocks we hold is very good,’ Pidcock said.

Adding to real estate

Real estate investment trusts represent one area he has been adding to since the summer. Holdings here include Parkway Life, Maple Tree Logistics trust, which owns warehouses across Asia, alongside Australian office property owner Dexus. The latter trust has a 6% yield and Pidcock says it offers dividend growth potential.

He has also bought into Orora, a business that spun out of Australian packaging company Amcor, as well as insurance company Suncorp.

The manager remains overweight in the more developed markets in the region, such as Australia and New Zealand.

‘One other country we like very much is the Philippines,’ Pidcock added. ‘Despite the typhoon [of November 2012], we think it is one of best economies in the region and will have the fastest growth rates in 20 to 30 years. It is coming from a low base of GDP per capita, but demographics are very good and companies are much better managed.’

He acknowledges the portfolio has suffered as a result of the emerging market currency sell-off, as he does not hedge as a policy. Sterling strength in the second half of last year brought the fund’s fourth quarter dividend down, which ultimately lowered the full-year payout.

However, he says hedging is not something he will look to employ and he expects this currency weakness to ultimately reverse. Pidcock also runs the Newton Emerging Income fund.

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