Invesco Perpetual launches Asian Income fund for Parks

Invesco Perpetual is launching an Asian equity income portfolio for head of Asian equities Stuart Parks and manager Tim Dickson later this quarter.

The Invesco Perpetual Asian Equity Income fund comes to market on 7 March.

It aims to generate a rising level of income along with long-term capital growth by investing primarily in shares in Asia and Australasia (excluding Japan), with a target dividend yield of 120% of the MSCI AC Asia Pacific ex Japan index.

At launch, it is expected to have a yield of about 4%, compared to a current yield of 3% from the MSCI Asia Pacific ex Japan. The managers will adopt a flexible investment approach, allowing them to buy companies with greater growth prospects with the aim of delivering a rising income over time.

The managers expect the largest geographical weighting to be in China and Hong Kong, with smaller positions in Korea, Australia, and India.

The fund will sit within the IMA Asia Pacific ex Japan sector.

Parks also runs the group's £639m Asian fund, and will manage the new fund using a similar combined top-down and bottom-up investment process. Asian Equity Income will typically have between 50 and 60 holdings, of which about half will also be held in the Asian fund.

Parks says Asian companies are increasingly recognising the importance of dividends as a way of rewarding and returning value to shareholders, resulting in consistent growth in payouts.

"The payout ratio of Asian companies has risen by more than 10% over the last 10 years and, according to research from Goldman Sachs, 37% of total shareholder returns from Asia over the last two decades came from income."

The manager argues the yield from Asian equities is sustainable over the long term, as corporate governance and corporate returns remain strong. "The percentage of profits paid out to investors has been rising consistently and we see no reason for that to change given Asia's very strong growth profile."

Dividends are a key contributor to equity market performance, accounting for 37% of total returns from Asian markets over the past two decades, Parks adds.

The new fund will sit within the group's existing equity income range, which includes UK, European, and global offerings.

The initial charge is 5%, with an annual management charge of 1.5%. The offer period runs from 21 February to 4 March.