In 2015, star manager Jason Pidcock left Newton Investment Management and his £4.6bn Newton Asian Income fund to join Jupiter Asset Management, launching the Jupiter Asian Income fund the following year.
Over his tenure, the manager had been a top performer, returning 185.7 per cent and beating the average peer in the IA Asia Pacific Excluding Japan sector by 33.72 percentage points, although it should be noted that performance had begun to tail off towards the end of his time in charge.
Performance of fund vs sector under Pidcock
Source: FE Analytics
His former fund was taken over by Zoe Kan, who had co-founded the strategy alongside Pidcock in 2005 and manages the fund with a team-based approach.
The switch saw the Newton fund haemorrhage money, with assets under management (AUM) falling from more than £4.5bn to the £1.3bn it currently stands at. Pidcock’s Jupiter fund meanwhile has AUM of £580m.
Below, FE Trustnet asks whether investors should have pulled their money from Newton Asian Income or stuck by it.
Square Mile Investment Consulting & Research’s Amaya Assan, said one big draw to Newton Asian Income fund is the firm’s investment process.
“In particular, the group's longer-term thematic research as well as its research capability with the firm's team of global sector analysts providing stock recommendations and industry input in addition to the research work carried out by the emerging markets/Asia team of managers/analysts, to which Kan is part of,” she said.
“So, there is a team-based approach in terms of idea generation and stock recommendations to which Kan will then use to populate her portfolio. Such a strategy might appeal to investors who prefer a more structured, firm-wide investment process.”
Conversely, Pidcock is more of a one-man band and is an experienced portfolio manager with a well-thought through investment approach, the senior investment research analyst said.
“He has access to the expertise of Jupiter's wider emerging markets and global equity teams but whilst he benefits from a supportive investment group, in keeping with Jupiter's company ethos, Pidcock is free to implement his own investment philosophy and process and is not constrained by a house style,” she said.
This greater flexibility and freedom from the investment culture and set up at Jupiter was one of the main reasons he opted for Jupiter over Newton in the first place.
She added: “For some investors, this strategy with its emphasis on the manager's investment capability, might be a more attractive option.
“What they have in common, however, is that both managers are clear in terms of the approach they take and have sensible investment objectives which they look to deliver, over reasonable time frames.”
Pidcock launched his new Jupiter fund in March 2016, during which time the performance difference between the two has been small, with Pidcock edging Kan 38.98 per cent to 35.53 per cent.
Performance of funds vs sector since Jupiter fund launch
Source: FE Analytics
This is relatively unsurprising as, at an asset allocation level, they are similarly positioned, while at the stock level they share four of the same top 10 holdings.
Assan noted: “There are of course similarities given that the fund was managed by Jason Pidcock for a number of years. Both are seeking well-managed companies with attractive dividend prospects.”
“Around a quarter of their funds are invested in Australia, which may mark these funds out as different from some others in the sector,” Andrew Merricks, head of investments at Skerritts Wealth Management added.
“This may reflect the fact that they worked together before Pidcock left to join Jupiter and so share a knowledge about the Australian market that is less obvious in other funds.”
One difference, however, is that the Newton fund has a higher yield of 4.4 per cent than the compared to the Jupiter fund’s 4.1 per cent.
Merricks said: “So if it is income that you are seeking as an investor then you would probably have been better off staying with Newton.
“However, if you are investing on a total return basis, the Jupiter fund would have given you slightly more, although very recently (in the last three months or so) Jupiter has lost around 4 percentage more in capital terms than its Newton rival.”
Another difference, is that until recently the Newton fund had a specific feature of selling any holding whose prospective yield falls below a 40 per cent discount to the index yield.
This feature was introduced by Pidcock (pictured) at the launch of his former fund but was not maintained when the manager set up the Jupiter Asian Income fund. However, more recently this has also been relaxed at Newton.
So, should investors consider buying either of these funds? Merricks said he would not be worried about investing client money in either fund.
“The fact that the Newton fund has continued the same kind of trajectory that it enjoyed under Pidcock speaks in favour of the abilities of Kan to hold on to what was always going to be quite a tricky to baton to grab,” he said.
“With the very recent increased volatility in the Jupiter fund, which fund out of the two to hold – if you had to make a choice – may come down to how you, personally, felt the trade war may develop.”
James Regan, investment manager at City Asset Management, said he has owned the Newton fund under Pidcock and has continued to hold it under Kan, although he likes the approach of both.
“We have held Newton since inception of the fund in 2005 and like the team-based approach that they adopt as well as the yield criteria,” he said.
“We did like the relaxing of the yield criteria that Pidcock adopted on his new fund and his ability to buy a small number of select stocks outside of this.
“Had Newton not relaxed their yield criteria to move with changing markets, Jupiter would have been my favoured fund. However, Newton opened theirs up which greatly increased their available market but also stops the forced selling.”