Aberdeen Asian Income Fund (AAIF) has performed strongly in the past, but since 2013 has mostly underperformed MSCI AC Asia Pacific ex Japan index. However, over the past 18 months its managers have made changes to the trust, which trades at a discount to net asset value (NAV) of about 9 per cent, that mean it could be a value play.
"Since Flavia Cheong was appointed as head of Aberdeen's Asian equities team around 18 months ago we are starting to see an evolving investment philosophy for Aberdeen Asian Income Fund,"
Part of the reason for the trust's underperformance of MCSI AC Asia Pacific ex Japan index is because it doesn't hold companies that don't pay a dividend, and these include Chinese internet companies such as Tencent (700:HKG), which has recently helped to drive up the index.
The two other Asian equity income investment trusts – Henderson Far East Income (HFEL) and Schroder Oriental Income (SOI) – have also recently underperformed the regional benchmark for similar reasons. But Henderson Far East Income still trades on a premium to NAV and Schroder Oriental Income trades at around par. "So Aberdeen Asian Income Fund is clearly the value play in the Asian income sector," argue analysts at Stifel.
Aberdeen Asian Income's ongoing charge of 1.09 per cent is much lower than the 1.95 per cent that Schroder Oriental Income's ongoing charge plus performance fee adds up to. Aberdeen Asian Income doesn't have a performance fee, and its ongoing charge could fall if the value of its assets increase.
A bit like CTY in the UK sector, I have been disappointed with the capital growth performance of AAIF over recent years compared to its peers, though it continues to pay a good dividend yield. This article helps re-assure me that AAIF has been making changes to improve the situation and I continue to hold and take the dividends.
I hold: AAIF, SOI & JAI in that sector. The latter (JAI - JP Morgan Asian Income) does invest in the growthier technology stocks of the region and supplements its dividend from capital.
https://www.investorschronicle.co.uk/fu ... nd-growth/