abrdn Emerging Markets Income Equity

The team focuses on dividend-paying companies, which represent over 90% of the MSCI Emerging Markets Index. This approach is well suited to emerging markets, where many companies generate high levels of excess cash. The team believes an increasing share of this cash is being returned to investors through dividends, helped by company balance sheets that have strengthened in recent years as debt levels have come down.

The team views investing as a marathon rather than a sprint. Cash flow sits at the heart of the process. Fundamental company research drives investment decisions, supported by screening tools that help narrow a broad universe of stocks to a more manageable number. Analysts study company accounts in detail, focusing on how businesses manage debt, control costs, invest for the future and reward shareholders, with sustainability and ESG factors considered throughout.

A key part of the process is understanding where each company sits in its business life cycle. This helps the team build a diversified and growing income stream across different market conditions, rather than relying on one type of company. This results in two distinct pillars.

Around half of the portfolio is typically invested in more established businesses that pay higher dividends, many of which are able to grow those dividends steadily over time. A smaller portion is invested in higher-yielding opportunities that offer attractive income but come with higher risk.

The remaining part of the portfolio is usually invested in companies with strong potential for dividend growth. These are often younger or faster-growing businesses that pay lower income today but are expected to increase dividends more quickly over time.

From the companies under review, the team selects those it finds most attractive, drawing on insights from its global analyst network and local presence in emerging markets. Regular reviews and team discussions help challenge ideas and refine decisions. The portfolio is built from the bottom up, led by the team’s highest-conviction ideas, and typically holds between 60 and 100 stocks.

The team focus on understanding and controlling the sources of active risk. Specialist tools are used to monitor risk and understand what is driving performance, helping the team distinguish between risks linked to individual companies and broader market influences. Diversification is a core part of the approach, with income sourced from a wide range of holdings rather than a small number of positions. Risk is further managed through a disciplined review and sell process, with investments reduced or sold when the original case changes or risks increase. Overall, active risk is carefully controlled and largely driven by stock-specific decisions.

Aberdeen integrates ESG considerations directly into its investment process, with the aim of delivering better long-term outcomes for clients. ESG factors are treated as financially material and are assessed alongside traditional financial metrics to form a holistic view of corporate performance and support better investment decisions. Equity analysts are responsible for identifying ESG risks and opportunities within every stock they cover. They also lead company engagement, supported by a dedicated Sustainability Group that provides research on ESG themes, event-driven issues and global sectors, as well as active stewardship through voting and engagement. This is complemented by on-desk ESG specialists who offer regional and thematic expertise and support ESG-focused engagement. Portfolio managers retain responsibility for engagement and voting activity, working to develop a forward-looking understanding of ESG risks and opportunities, with engagement outcomes tracked throughout the investment lifecycle to support long-term value creation.