abrdn Emerging Markets Income Equity – Recommended addition

We have added the abrdn Emerging Markets Income Equity fund to our Recommended list.

Fund Snapshot

An emerging market equity income fund where the manager is focused upon high quality companies.  The manager looks not only for attractive current dividend yields, but also for dividend growth.  Within its sector, the fund features in our ‘Larger-Cap, Income and Growth’ category.

Fund Description – Key Points

• Lead manager, Matt Williams, is a senior Investment Director and is based in London.  He joined the company in 1998 and works closely with his colleagues in the Global Emerging Markets team.
• The fund is best described as an income and growth strategy and the manager’s approach is built upon the idea of the compounding value of growing dividends.  He seeks to generate a yield premium of 115% versus the mainstream emerging markets equity index.
• Allied to this, the manager seeks to invest in companies with growing profits and cashflows that have the capacity to increase dividend pay-outs over time.
• The process is distinctly bottom-up in nature, with the team’s research effort centring around the search for quality companies using a well-defined analytical framework.
• Approximately 50% of the fund is invested in companies where the team believes there will be strong dividend growth.  The other 50% of the fund is devoted to companies that have high dividend yields.

Characteristics and Utility

• The manager’s pragmatism and focus on balancing portfolio risk helps the fund to navigate a wide range of market conditions.  However, the innate bias towards quality companies with attractive dividend prospects means that it is likely to struggle in momentum fuelled markets or where poorer quality companies are favoured.
• Investors should expect some variability in the behaviour of the fund compared to the index, given its active share characteristics. However, its quality bias and focus upon companies with robust financials can be helpful in times of distress.
• The fund represents a well-balanced emerging markets equity income offering.  As well as being used as an income product, it can also be used as a mainstay emerging market equity holding.

To view our full factsheet, please visit the fund page on our website.

abrdn Emerging Markets Equity – Established removal

At the same time, we have decided to remove abrdn Emerging Markets Equity from our service.  The fund previously featured on our Established list.

We believe that the abrdn Emerging Markets Income Equity fund is more relevant to the UK retail audience, given its flexible approach and more balanced profile.

abrdn Emerging Markets Equity has a strong institutional heritage and the team’s unerring focus upon quality companies suits investors with a long-term time horizon.