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ASI set to launch dividend fund

The new Luxembourg-domiciled Sicav will be offered to Hong Kong and Singapore retail investors as well as to the European market next week.

The fund’s strategy will replicate existing versions managed in the US by New York-based Josh Duitz, senior vice president and Martin Connaghan, investment director in Aberdeen Standard Investments (ASI) global equities team.

Duitz has run the same strategy in the US since 2012 and manages three funds (one open-end and two closed-end) with combined assets of $1.2bn.

The approach combines four research-driven investment strategies — growth, value, special dividends and dividend capture rotation — which aim to maximise the amount of distributed dividend income and to identify companies globally with the potential for dividend increases and capital appreciation.

“The fund is a premium dividend product that delivers a stable income paid out each month,” Ben Sheehan, senior equities investment specialist, Asia Pacific at ASI told FSA.

“There is a great need for sustainable, premium yield, especially as investment grade bond yields have compressed significantly this year. Stable equity income is an attractive alternative,” he said.

Almost all individual holdings will pay a dividend, but there isn’t a minimum required yield.

However, the fund’s dividend yield will be higher than the yield of its benchmark MSCI All Country World index, which is currently 2.1% (based on trailing 12-month earnings), according to Sheehan.

The fund has a core portfolio of dividend-paying stocks selected from a broad spectrum of sectors and global markets, which is supplemented by allocations to stocks with special ‘dividend events’ to enhance its overall yield,” said Sheehan.

The US vehicles currently have exposure to 21 countries, including emerging markets, but their 45.5% weighting to the US dwarfs the 8.9% weighting to their second largest allocation, France.

The funds’ heaviest sector weighting is in information technology (18.5%) and its two biggest individual holdings, Apple (3.6%) and Microsoft (2.2%), pay sub-1% dividend yields.

However, the 21.21 average price-earnings ratio (PER) of the fund is lower than the 23.64 PER of the MSCI ACWI, according to the end-August factsheet of one of the US closed-end funds, so there is no obvious tilt towards high growth technology shares.

The factsheet also shows a one-year return of 11.9% and a three-year cumulative return of 7.7%, compared with 16.5% and 9.0% respectively by its benchmark.

Sheehan believes the Sicav will be “scalable” and has the potential to grow in size substantially, because the strategy focuses on mid- and large-cap stocks.

The ongoing charges fee for the Hong Kong and Singapore retail share class is 1.5%, lower than the 1.86% median fee for international equity funds available to Hong Kong retail investors, according to FE Fundinfo data.

The Edinburgh-based firm’s most recent Sicav launch was its Asian Sustainable Development Equity Fund, which can only be bought in Hong Kong and Singapore by professional investors. It also recently gained approval from Singapore’s regulator to distribute an Emerging Markets Bond Fixed Maturity (2024) product.

Aberdeen Global Dynamic Dividend Fund (US)

Top 10 holdings:

Source: Aberdeeen Global Dynamic Dividend Fund (US) factsheet

Sector allocation (%):

Source: Aberdeeen Global Dynamic Dividend Fund (US) factsheet


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