Aberforth Geared Value & Income (AGVI)

The six-strong management team behind Aberforth Geared Value & Income (AGVI) look to capitalise on the flexibility of the investment trust structure to create a portfolio that offers investors high income and capital growth potential. This approach includes the use of zero dividend preference shares (ZDPs) which act as a form of Gearing, as well as the managers employing a strategy that looks at undervalued stocks from the lower end of the UK market-cap spectrum.

This approach encapsulates the two key specialisms of the management team at Aberforth Partners; UK small caps and value investing. The managers aim to identify out-of-favour companies trading at attractive valuations through a bottom-up process and holding them until their potential is reassessed by the market. This has contributed to AGVI having one of the biggest value-tilts in the peer group (see Portfolio).

The managers have highlighted the yield on their opportunity set having moved above that of the FTSE All Share Index for only the third time this century. The key drivers of this are resilient earnings from companies, and depressed valuations due to weak sentiment. This has not only supported the Dividend picture for AGVI, which now yields c. 5.8%, but also the capital return potential as previous times this anomaly has occurred have been followed by strong out-performance from smaller companies. We note that the 5.8% yield reflects only the ordinary dividends, and the trust has managed to pay a special dividend for the past two years, the last one of which raised the historic yield to over 6.5% in total.

Further adding to the capital upside potential is the trust’s Discount, which currently stands at 9%, approximately in line with the average since inception. This was trading much narrower earlier in 2026, although has widened in recent weeks as the share price has failed to keep up with a rising NAV.