Fund Profile


This is a non-independent marketing communication commissioned by abrdn. 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.

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abrdn Equity Income (AEI), formerly Aberdeen Standard Equity Income, is a trust in the UK Equity Income sector that takes an unconventional approach to achieving a conventional mandate. The objective is to provide shareholders with an above-average income while also providing real growth in capital and income. The manager, Thomas Moore, applies a contrarian investment philosophy to achieve this commonplace set of objectives, eschewing in vogue quality-growth stocks and seeking underappreciated (often smaller or mid-cap) value stocks instead.

The value investing style disappointed in terms of Performance for several years. Whilst some other trusts in the UK Equity Income peer group changed course and tilted towards quality-growth stocks, Thomas has retained conviction in the value-led philosophy that has guided him in the decade-plus he has been lead manager of AEI, leading to strong performance in 2022. AEI has outperformed peers and benchmark year to date (as at 20/05/2022) as value stocks rallied, helped by the fact that it is one of the most value-orientated trusts left in the peer group (see Portfolio). This outperformance has seen the Discount narrow to its narrowest level for several years.

AEI currently offers an attractive Dividend yield of c. 5.7% on a historical basis, a hefty premium versus the FTSE All-Share Index’s yield of c. 3.2%. This follows multiple years of impressive dividend growth: for the five years ending FY 2021, the annualised rate of dividend growth was 6.6%.

Analyst's View

The struggles of value investors in recent years will not be news to followers of markets, and shareholders of AEI are no exception in this regard. However, Thomas believes that the recent value rally on the back of persistent inflation and rising interest rates heralds a regime change that could see value stocks strongly outperform for a significant period. In our view, there are merits to this argument. However, irrespective of an investor’s view on growth versus value, it is noteworthy that a number of trusts in the UK Equity Income peer group have moved to a more quality-growth style. As AEI offers a differentiated combination of the value style and a tilt to smaller companies within the sector, it can provide style diversification benefits to UK equity income investors with more benchmark aware and quality-growth tilted strategies already in their portfolios.

Additionally, this unusual combination of styles to date seems to have overcome the ‘dividend dilemma’ of the trade-off between achieving a high current yield and securing future dividend growth, with the value stocks providing a current high yield whilst the smaller companies provide greater dividend growth. Therefore, AEI may appeal to income investors, providing an attractive yield with a pleasant kicker of dividend growth alongside the potential to hedge against a rotation away from quality-growth stocks into value stocks. Given the recent narrowing of the discount, it seems at least some investors agree with our assessment.


  • One of the highest yields and rates of dividend growth in the sector
  • Likely to perform strongly if inflation persists and interest rates continue to rise
  • Differentiated portfolio provides access to value style and smaller companies


  • Returns have been disappointing over medium term as value style underperformed
  • Gearing can exacerbate the downside (as well as enhance the upside)
  • Unlikely to appeal to investors with prescriptive ESG requirements
Continue to Portfolio

Fund History

26 Mar 2024 High yield UK stocks, with AEI Manager Thomas Moore – Podcast: Trust Issues #28
We talk managing value trap risks, opportunities in the UK, and the outlook for UK equities...
27 Dec 2023 Fund Analysis
AEI is delivering a sector-leading yield, with low valuations offering strong capital growth potential…
13 Dec 2023 In-come all ye faithful
Equity income could be a beneficiary of the higher interest environment, with trusts a good way to capture it…
11 Oct 2023 You say potato
Despite being in the same sector, investment trusts in the UK Equity Income sector could be more lowly correlated than you might think…
01 Feb 2023 Go your own way
Our analysis shows that investment trusts offer better diversification for those seeking income from equities...
01 Feb 2023 Fund Analysis
AEI generates one of the highest yields in the sector without compromising growth potential…
25 May 2022 Fund Analysis
A contrarian approach to UK equity income investing…
09 Feb 2022 The dividend dilemma
We examine the trade-off between earning a current high dividend yield and growing future dividends...
15 Dec 2021 Dividends in the time of corona
Investment trusts have proven their worth during the pandemic, delivering dividend growth despite the turmoil…
15 Sep 2021 Fund Analysis
ASEI has had a strong twelve months as the macro shifts in its favour...
19 May 2021 Results analysis: Aberdeen Standard Equity Income
ASEI’s board have indicated that it intends to raise the dividend again in the current financial year…
03 Mar 2021 Strength in depth
UK Equity Income trusts have done a heroic job of maintaining their dividends through the pandemic...
05 Nov 2020 Fund Analysis
ASEI targets above-average income and capital growth with an index-agnostic approach...
15 Apr 2020 Hold fast
Investment trusts' revenue reserves could make them a vital stronghold for investors facing UK dividend cuts of as much as 47%....
12 Mar 2020 The importance of buying earners*
Our analysis shows that the impact of dividend contributions on long term returns is anything but trivial...
05 Mar 2020 Fund Analysis
ASEI targets above-average income and capital growth with an index-agnostic approach...
05 Dec 2019 Holding something in reserve
A sterling bounce poses a threat to UK dividends - we look at how UK equity income investment trust managers stand prepared…
26 Jun 2019 Measure for measure
In the first of a two-part series, we examine the tools investors can use to assess how active a manager actually is…
14 May 2019 Fund Analysis
The long-standing manager, Thomas Moore, utilities a bottom up approach to identifying opportunities, and is entirely index agnostic in his approach...
03 Oct 2018 We can be heroes
Our analysis has uncovered the trusts which have generated a solid income through thick and thin - without compromising other aspects of performance...
01 Oct 2018 Fund Analysis
Standard Life Equity Income (SLET) offers investors above-average income, while also providing real growth in capital and income.
13 Jun 2018 Still waters run deep
UK equity income trusts trade at a discount to their global-equity-income-focused counterparts, yet our research suggests this could be unjustified...
13 Jun 2018 Fund Analysis
A highly-differentiated UK trust which, thanks to the manager’s unconstrained approach, generates the majority of its income away from the most popularly-held stocks in the sector...
13 Dec 2017 Fund Analysis
A highly-active, benchmark-agnostic portfolio of UK equities with a clear bias towards companies that generate attractive dividend growth.
06 Jun 2017 Fund Analysis
A UK focused equity income portfolio with a solid track record and unique investment style...
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