Fund Profile

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This is independent research issued by Kepler Partners LLP. Aberdeen Standard Investments is a client of Kepler Partners LLP. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
AAIF’s focus on quality and value could be coming back into favour…
Overview

Aberdeen Asian Income Fund (AAIF) invests in emerging Asia and Australasia. The objective is to generate a high, and growing income and the strategy is to focus on high quality, cash generative businesses which pay dividends.

AAIF yields 4% on a historic basis. The board has been able to use revenue reserves to support the dividend through the pandemic and actually raised the FY 2020 dividend despite a fall in dividends received from the trust’s portfolio. As we discuss in the Dividend section, the portfolio revenues seem to have seen a good recovery in FY 2021 so far.

Unlike some of its peers, AAIF pays a dividend from natural income rather than from capital (although the board has that power in reserve). This means that all its holdings are expected to contribute to the yield and dividend growth requirements. As a result, AAIF has had little in the e-commerce space and more in traditional value sectors such as financials and materials. This has led the performance to be disappointing relative to peers in recent years, but to have been very good over the past year as the environment has changed (see Performance section).

While the discount narrowed at the start of 2021 during the reflationary rally, as Asian markets have sold off this year, it has widened again and stands at 12.7% at the time of writing.

Kepler View

AAIF offers income-seekers a way to diversify their sources of income. As well as the exposure to the fast-growing Asian economies, the portfolio also offers significant exposure to technological hardware, which doesn’t feature heavily in UK equity income funds. The strategy of focusing on natural income has worked against the trust on a total return basis in recent years, but the current environment has been much more helpful. If the troubles in China continue, this will also help AAIF in relative terms, given its low weight to the country’s markets.

Despite an improvement in relative returns, the discount remains wide and has crept out to 12.7% at the time of writing. This has been a period of risk aversion in Asian markets, with ongoing concerns about the political and economic situation in China and perhaps also the effects of a global delta wave dip. It is worth noting that despite its being underweight to China, AAIF would be unlikely to escape the impact of a serious slowdown in the country, with the materials sector one vector of possible contagion. Nonetheless, given the ongoing issues in the country, AAIF’s low weighting could continue to be helpful. On the other hand, there is a cyclical bias via the high weight to financials and materials, which could cause problems if the economic recovery stalls.

bull bear
A good track record versus the High Dividend Index
Highly active country and sector positions could lead to periods of underperformance
Offers exposure to high-yielding technology stocks
Weight to financials and materials brings exposure to economic cycle
Disciplined team-based approach should aid consistency
Tends to run with gearing which increases sensitivity in down markets as well as up markets
Continue to Portfolio
2022 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

05 Jan 2022 Kepler’s top-rated trusts for 2022
We unveil the winners of our ratings for 2022 in the Growth, Income & Growth and Alternative Income categories…
06 Oct 2021 Slides and Audio: Aberdeen Asian Income
Download the presentation and listen to the audio from our 'Now that's what I call a discount!' Autumn conference on 30 September...
29 Sep 2021 Fund Analysis
AAIF’s focus on quality and value could be coming back into favour…
23 Sep 2021 Now that's what I call a discount 2021!
For the second year running we examine trusts on discounts which, in our view, don't make sense...
15 Sep 2021 Bargains galore
We review our discounted opportunities portfolio, with one constituent rallying more than 30% in just two months…
09 Jun 2020 Fortune favours the brave
Better yields and discounts are on offer in the emerging markets…
05 Jun 2020 Deep impact
Audio and presentations from our conference this week, where fifteen of the world's best fund managers described a profoundly altered investment landscape...
13 May 2020 Braving the new world
Join 15 of the UK's best known fund managers at the Kepler Trust Intelligence Virtual Summit to find out how they see the world after the pandemic...
21 Aug 2019 All change: a closer look at the AIC's revised sectors
We examine the AIC's revised sector classifications and discuss whether further improvements could be made...
25 Jul 2018 The Bulletproof Income Portfolio
Our Bulletproof Income Portfolio was set up to illustrate the benefits of investment trusts in providing a stable income...
19 Apr 2018 When others are fearful...
We ask whether it is time to be greedy after the recent selloff in Asia equities...
22 Mar 2018 Fund Analysis
A solid income producing trust that offers a sturdy yield of 4.3% via a portfolio of high quality, cash generative companies, managed by a highly experienced team led by Hugh Young...
22 Mar 2018 The search for discounted yield
We scour the investment trust universe for trusts offering chunky yields on a discount...
29 Nov 2017 Fund Analysis
A portfolio of UK equities with a focus on companies that can generate attractive income and capital growth.
27 Sep 2017 Not the usual suspects...
As equity valuations continue to defy logic, we identify the trusts least correlated to their fortunes...
21 Mar 2017 Eyes on the price...
As the reality of Donald Trump's administration settles in and market momentum continues to grow, we examine the case for emerging markets exposure...
21 Feb 2017 Fund Analysis
21 Feb 2017 Digging in
The Bulletproof Income Portfolio enters 2017 with increased dividend cover at a time when a defensive income seems more precious than ever...
19 Apr 2016 Brexit discount slump is a buying opportunity
Analysts believe a sharp bounce is likely if the public comes down in favour of a 'remain' vote.
26 Jan 2016 Dodging bullets
The Bulletproof Income Portfolio performed well in a turbulent 2015, the perfect year to test its strengths...
05 Jun 2015 Fund Analysis
05 Jun 2015 The Bulletproof Income Portfolio
Six investment trusts with income credentials to die for.
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