Page 10 - DIY Investor Magazine - Issue 23

However, Ashmore does one thing and does it well.
It has managed to build up a loyal client base, who are aware that the asset class is cyclical. Looking at their fund flow data, client assets seem to be very sticky.
When emerging market debt markets go up, we have seen them win a disproportionate amount of business, and when they fall, they have historically retained more than their peers.
The economy appears to be entering a late cycle phase. There may still be growth to come, but the economic data is weakening and in the UK, we need to contend with a populist prime minister, who has not always been business-friendly.
There is enough reason to believe a more cautious view is warranted. We want to keep a balance in the trust, ensuring that it remains resilient, whatever the economic weather.
Important information
SHIRES INCOME
- The value of investments and the income from them can fall and investors may get back less than the amount invested.
- Past performance is not a guide to future results.
- Investment in the Company may not be appropriate for investors who plan to withdraw their money within 5 years.
- The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in
the Net Asset Value (NAV) meaning that any movement in the value of the company’s assets will result in a magnified
movement in the NAV.
- The Company may accumulate investment positions which represent more than normal trading volumes which may
make it difficult to realise investments and may lead to volatility in the market price of the Company’s shares.
- The Company may charge expenses to capital which may erode the capital value of the investment.
- There is no guarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Value.
- As with all stock exchange investments the value of the Company’s shares purchased will immediately fall by the
difference between the buying and selling prices, the bid-offer spread. If trading volumes fall, the bid-offer
spread can widen.
- Certain trusts may seek to invest in higher yielding securities such as bonds, which are subject to credit risk, market
price risk and interest rate risk. Unlike income from a single bond, the level of income from an investment trust is not
fixed and may fluctuate.
- With funds investing in bonds there is a risk that interest rate fluctuations could affect the capital value of investments
Where long term interest rates rise, the capital value of shares is likely to fall, and vice versa. In addition to the interest rate risk, bond investments are also exposed to credit risk reflecting the ability of the borrower (i.e. bond issuer) to meet its obligations (i.e. pay the interest on a bond and return the capital on the redemption date). The risk of this happening is usually higher with bonds classified as ‘sub-investment grade’. These may produce a higher level of income but at a higher risk than investments in ‘investment grade’ bonds. In turn, this may have an adverse impact on funds that invest in such bonds.
- Yields are estimated figures and may fluctuate, there are no guarantees that future dividends will match or exceed historic dividends and certain investors may be subject to further tax on dividends.
- Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.
Other important information:
Issued by Aberdeen Asset Managers Limited which is authorised and regulated by the Financial Conduct Authority in
the United Kingdom. Registered Office: 10 Queen’s Terrace, Aberdeen AB10 1XL. Registered in Scotland No. 108419.
An investment trust should be considered only as part of a balanced portfolio. Under no circumstances should this information be considered as an offer or solicitation to deal in investments. You should obtain specific professional advice before making any investment decision.
Find out more at: www.shiresincome.co.uk
DIY Investor Magazine | Oct 2019 10