Page 7 - DIY Investor Magazine | Issue 40

ASIA DIVIDENDS
The growth in this part of the market allowed it to pay a special
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dividend in 2023.
Asia gives investors a different type of exposure. abrdn Asian
Income Fund, for example, brings together the diverse dividend
THE US
opportunity set in Asia, across a number of growth themes.
Dividend strategies in the US have struggled relative to growth
April 2024 The growth in good quality Asian companies across all these
strategies. Soaring share prices for the ‘Magnificent Seven’ have themes enables the trust to find ideas across geographies and
contributed to strong gains for the S&P 500 index, and made
sectors in Asia, and to pay an increased dividend in 2023.
it difficult to beat. However, these areas now look expensive Yoojeong Oh, manager of abrdn Asian Income Fund, highlights
and there is scope for a rebalancing towards dividend paying
the Trust’s position in technology companies, for example.
companies, particularly at a time of higher interest rates.
DIY Investor Magazine · Yoojeong says: “These are not low yielding internet companies,
‘THE NORTH AMERICAN TRUST IS DIVERSIFIED ACROSS A
but the hardware companies, the supply chain companies that
BLEND OF SECTORS, INCLUDING HEALTHCARE, STAPLES,
make the semiconductor chips that are the building blocks
UTILITIES, INDUSTRIALS AND FINANCIALS’
for data centres, cloud storage, and digital devices, which are
benefiting from structural growth driven by generative artificial intelligence.” The fund owns a number of the large caps, such as TSMC, but also the small and mid cap companies along the value chain.
Another growth theme is the rise in the middle classes, as wealth grows and diversifies. This creates a tailwind for areas such as wealth protection and financial services.
Yoojeong adds: “We hold companies such as AIA Group, an insurer listed in Hong Kong, but with a fair chunk of its business in China. It gives us access to that growing middle class within the domestic China market.” The Trust is also invested in infrastructure assets. It holds Keppel Infrastructure, for example, which invests in infrastructure assets in the Philippines, Korea, Middle East and Australia.
It has strong sustainability targets, investing in wind and solar farms, plus EV charging stations.
‘ANOTHER GROWTH THEME IS THE RISE IN THE MIDDLE CLASSES, AS WEALTH GROWS AND DIVERSIFIES’
The North American Trust is diversified across a blend of sectors, including healthcare, staples, utilities, industrials and financials. It has a naturally defensive tilt that should protect investors against the impact of a weaker US economy.
Manager Fran Radano says the team is focused on strong balance sheets: “Balance sheets often don’t matter for five or six years and then they matter a lot in a tougher market. Free cash flow and management strength are also important for us.”
However, dividend growth is also important: “We’re looking for companies that are growing dividends and we have a mix of 2-4% dividend growers, 5-7% and 9-10+%, and our average dividend yield is 3.5%.” He points to Merck, which balances defensiveness and growth. It has a range of leading oncology treatments across immune-oncology, tissue targeting and precision molecule targeting. L3 Harris is a defence company that has displayed modest, but consistent growth.
“This is one of the last parts of the economy where supply chains are still not back to normal after the pandemic. There
is a strong industry backdrop as defence spending rises and there were two industry deals last year.” This trust has around 35-40 holdings and is finding plenty of overlooked opportunities in the current market, given the narrow focus on a handful of technology companies.
‘INVESTORS DO NOT HAVE TO SACRIFICE GROWTH, OR RECOVERY, TO GENERATE A HIGH INCOME FROM THEIR INVESTMENTS’