Liontrust launches its Asian Income fund

London-based Liontrust has launched the previously announced Asia Income Fund to provide investors with diversification away from the UK and exposure to Asia’s longer term growth prospects.

The Liontrust Asia Income Fund, a UK domiciled unit trust, aims to have a prospective yield approximately 10% above that of Asia Pacific (excluding Japan) markets. The Fund is managed by Mark Williams, along with Carolyn Chan and Shashank Savla who have combined investment experience of 45 years.

Mark Williams said there is a clear desire by Asian companies to increase dividend payouts. “This is a reflection of the strong financial position of companies and countries in Asia and an increasing focus on shareholder returns,” he noted.

“Having suffered their own financial crisis in 1997, Asian companies and governments went through the deleveraging then that Western economies are struggling with now. Although this was a long, painful process, Asian countries were lucky to have completed it at a time when global growth was more robust. This has left them, although as always with exceptions, in a strong financial position.”

Investors seeking income from Asian equities have profited from this trend. Investors in the companies in the top quintile of yielding stocks (on a forward looking basis) from January 1995 to mid-October 2011 would have outperformed Asia Pacific (excluding Japan) markets by more than 7% on an annualised basis if dividends were reinvested (source: Daiwa).

This outperformance was achieved through different market environments, including the Asian financial crisis, the bursting of the technology bubble and the global financial crisis.

Williams is confident about the sustainability of dividend payouts by Asian companies. “In 2008, in the midst of the global financial crisis, more than half of companies in Malaysia, China, Singapore, India, Thailand, Indonesia and the Philippines did not significantly alter or raise their dividends in absolute terms.”

 

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