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Far East Funds: Stable Income Amidst AI Hype
23 Nov
Summary
- Aberdeen Asian Income fund offers 5.8% dividend yield.
- Fund prioritizes companies paying dividends, avoiding AI bubble risks.
- Manager shifts portfolio towards China and India for diverse income.
Equity income funds offer a potential buffer against stock market corrections through regular dividend payments. Far Eastern equity income funds are gaining traction due to regional companies' strong dividend payouts. The London-listed Aberdeen Asian Income fund, for instance, has derived over half its returns from dividends in the past five years and has a 5.8% annual dividend yield.
Manager Isaac Thong highlights that income provides a steadier investment path, countering market volatility. He expresses concern over potential US AI stock market bubbles, but believes the fund's portfolio, featuring companies like Taiwan's Accton and South Korea's Samsung, is more resilient. These companies trade at lower earnings multiples, offering a safer alternative to highly inflated US AI firms.
Thong has recently reshaped the fund's geographic focus, increasing investments in China and India while reducing exposure in Singapore and Taiwan. This diversification includes companies with varying dividend yields, such as China's Tencent and Indonesia's Bank Mandiri, aiming to deliver consistent income despite market fluctuations.
