The fund invests in a portfolio of quality companies with high dividends. Approximately half the portfolio will be in stocks currently producing a high yield, and half in companies expected to grow their dividend substantially over the longer term. Derivatives are used to enhance the income, as well to allow the manager to include lower yielding companies with good future prospects without decreasing the fund’s yield. The process seeks to identify high quality businesses with sustainable cash flow, as well as management who are willing to increase revenue paid out to shareholders.
We like the fund as it has consistently delivered the highest yield within the Asian income sector, and total return performance has been very strong versus peers. The use of derivatives has contributed substantially to income, and we do not deem the derivatives used in the strategy to be particularly risky.