AIF.L Regulatory News (AIF)

London, UK, 19 September 2016

Edison issues research review on Acorn Income Fund (AIF)

Acorn Income Fund (AIF) has produced solid long-term total returns (+138% share price and +135% NAV over five years) from its portfolio of UK smaller companies (70-80% of assets) and high-yielding securities (20-30%). The first half of 2016 has been a more challenging period, but over the latter part of the summer AIF has begun to reassert its trend of outperformance versus its benchmark. The allocation to the small-cap portfolio has been increased to the maximum 80% as the managers continue to find well-financed, dividend-paying smaller companies at attractive valuations. The current wider than average discount may reflect a degree of uncertainty ahead of the forthcoming five-yearly discontinuation vote; investors are reminded to vote against the special resolution if they wish to back the continuation of the company.

At 16 September AIF's shares traded at an 11.4% discount to cum-income NAV. This is wider than both short- and longer-term averages, possibly reflecting under-performance earlier in the year and uncertainty ahead of the discontinuation vote (see above). Strong medium- to longer-term performance and an attractive yield of 4%+ have seen the shares frequently trade at a premium, and it is reasonable to expect the discount to narrow (assuming shareholders vote against discontinuation) if the early signs of a return to outperformance become more established. 

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