Aberdeen Asian Income Fund Limited

Aberdeen Asian Income Fund Limited uses a bottom-up, research-driven process, investing in high-quality businesses across Asia that can generate sustainable returns above the cost of capital.

This strategy is built on the confidence surrounding Asia’s growth story. The region drives around half of global GDP growth, supported by trends like technology, strong demographics and a high savings rate. While Asia does carry some geopolitical risk, it also offers a wide range of opportunities across fast-growing economies and developing markets.

Isaac and the team are specifically targeting high-dividend franchises which they want to hold for a long period of time. This sees them targeting three specific areas:

Quality businesses with strong balance sheets
Sustainable dividend growth through reliable cashflows – companies with high returns on equity
Sound and consistent dividend policy

The trust invests in companies with varying levels of dividend yield. This can be established dividend payers - yielding more than 6% - to less mature dividend payers offering less than 3%. The mix helps give the trust a balance between capital growth and income (dividend returns).

The final portfolio will hold between 40-70 stocks, although Isaac is keen to bring the actual numbers down to increase portfolio conviction. Since his appointment, Isaac has also tilted the portfolio slightly toward growth opportunities. This means a modest increase in companies offering lower initial yields but higher long-term potential. Portfolio turnover, historically around 30–35%, is expected to rise slightly to about 40%.

The trust’s core yield is around 4%, but the team can enhance this to over 6% through tactical dividend trades. Around 4% of the fund’s assets are held back for short-term positions in companies before their ex-dividend dates to generate additional income for the trust. When these trades aren’t available, the cash is invested in index ETFs or futures to stay fully invested.

While income-focused investments like this one are generally lower risk than pure growth strategies, investors should remember that the fund invests across emerging markets, which can be more volatile than developed economies. Currency movements can also affect both income levels and the value of your investment.

The board regularly reviews potential risks through a detailed risk matrix and heat map, discussed at Audit Committee meetings. It also monitors new or emerging risks and adds any significant ones for closer tracking.

Importantly, the trust benefits from the full breadth of aberdeen’s research platform. The manager has further reduced risk by diversifying dividend sources across a broad range of companies, aiming to deliver a smoother and more resilient income profile over time.

The firm places constructive engagement and environmental, social and governance considerations at the centre of their research, making sure it is a responsible steward of client assets. The investment manager believes this approach can mitigate risks and enhance returns for its clients, as companies with robust ESG practices tend to enjoy longer-term financial benefits.

A globally-applied approach to evaluating stocks is used to compare companies consistently on their ESG credentials – both regionally and against their peer group. This looks at which ESG factors are relevant for a company, how material they are, and if they are being addressed; aberdeen’s own assessment of governance, ownership and management; and if incentives and key performance indicators are aligned with company strategy/shareholders. A combination of external and proprietary in-house quantitative scoring techniques are also applied.

The board has restricted the maximum level of gearing to 25% of net assets, although in normal market conditions they are unlikely to take out gearing in excess of 15%.

Aberdeen Asian Income Fund Limited has traded at an average discount of -10.6% to NAV over the past five years (figures to 29 October 2025). This has traded between discounts of -5.9% and -15.5% over this period. The company has used share buybacks opportunistically in order to provide liquidity to the market and provide an enhancement to the company’s NAV to benefit shareholders.