UK-based Threadneedle Investments has launched a developed Asia growth and income fund, its first to be managed in the region, and three more products are to come in the next month.
The Threadneedle (Lux) Developed Asia Growth and Income fund will be co-managed by head of Asian equities Ng Soo-Nam and Christine Seng, Asian equity fund manager. Ng declined to give more details about the other products in the pipeline.
Threadneedle is a relative latecomer in terms of launching an Asian income fund, with firms such as JP Morgan Asset Management and Schroders having had products available for some years.
Asked how it aims to compete with such rivals, Ng says: “This is a plan that has been in the making for some time. Launching strong local manufacturing capabilities is and has been a key objective of our aggressive Asian growth plan and overall global strategy.
He adds that Threadneedle felt it was important not to rush the process and ensure it had the right people and teams in place first and had clearly identified the strategies we wanted to target. It also wanted to ensure it had the right structures, back-office support and potential distribution models and partnerships in place, notes Ng.
Asked whether the firm will offer or already runs segregated mandates for income and growth strategies, he was non-committal, saying: “We are always exploring and assessing new opportunities that help us best meet our clients’ needs, so we won’t be ruling anything out.”
Threadneedle's Asia-based investment team – its first outside the UK and US – is now 11-strong. There are five in equities in Singapore and six covering fixed income across Malaysia and Singapore, having opened a Kuala Lumpur office in October.
Four of the five equities staff came from Nikko Asset Management, also in October. Portfolio manager Liang Weixiong and analyst Low Wee-Jia joined from the Japanese firm's Singapore office alongside Ng and Seng.
With regard to potential demand for the new fund, Ng acknowledges there has been a slowdown in China-led growth in Asia. But he sees this stabilising over the next three years, “given proactive economic policies and the continuing recovery in the US and Europe”.
The new fund will invest largely in stocks of companies listed or domiciled in developed markets in Asia Pacific excluding Japan, or those deriving most of their economic activity from such markets.
It may also buy other securities, such as convertible bonds, real estate investment trusts and money market instruments. It aims to provide total returns comprising income and capital growth.
The fund aims to achieve a total return comprising 3%-plus dividend yield and moderate capital appreciation and will aim to outperform the composite index by 3% per annum over rolling three-year periods.
The primary benchmark is a composite benchmark of 40% MSCI Hong Kong, 40% MSCI Singapore and 20% MSCI Australia.