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Asset Management / Wealth Management
Abrdn launches emerging markets income equity strategy
Investment team analyzes companies according to their profit growth and ability to pay a dividend
The Asset 12 Apr 2024

Global investment firm abrdn has launched a strategy that seeks to achieve a combination of growth and income by investing in emerging markets (EM) equities.

The Emerging Markets Income Equity Strategy mirrors the strategy of a United Kingdom-domiciled vehicle that launched in 2012 and has been successfully managed by lead fund manager Matt Williams and a supporting portfolio construction group from London and Singapore.

The team looks for healthy businesses and profitable growth by analyzing cash flow, prioritizing companies on their ability to pay a dividend, in the context of where they are within their investment cycle.

The strategy is available to accredited investors and institutional investors in Singapore and professional investors in Hong Kong.

David Hanzl, head of wholesale, Asia-Pacific, at abrdn, says: “We understand income is an evergreen demand of Asian investors. The launch demonstrates our commitment as a specialist asset manager to expand our diversified income solutions which are designed to address the growing income needs of an ageing population in this region.

“The proportion of emerging market companies paying dividends is now comparable to developed markets. Therefore, we believe the strategy will provide a new option for investors, presenting long-term opportunities to benefit from high-growth markets and enjoy compelling income yields in the meantime,” Hanzl adds.

The strategy takes a balanced two-pillar approach to portfolio construction – 50% in high dividend, 50% in dividend growth. This balance, combined with an agnostic approach to stock picking across the breadth of the EM universe, aims to deliver a premium and growing income stream over various types of market environments as well as attractive upside and downside capture characteristics, abrdn says.

Portfolio risk objectives are to prioritize risk towards the team’s stock-specific insights and provide diversification of income ideas while aiming to dampen country and sector risks. The strategy is not dependent on a concentrated group of high-yielding stocks to deliver performance.

“Emerging market investing is often associated with growth rather than income. However, data shows that there are now as many companies paying dividends in emerging markets as in developed markets,” says Williams, senior investment director at abrdn.

“Having managed the relevant UK-domiciled vehicle for over a decade, we can see a uniquely appealing income universe for active investors with a total return mindset. The growth of earnings and the compounding of dividends in EM equities can make for a powerful combination in portfolios, and we’re delighted to launch the strategy, bringing this opportunity to more investors.”

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