3 Nov 2020 14:42
London, UK, 3 November 2020
Edison issues review on Acorn Income Fund (AIF)
Acorn Income Fund (AIF) has seen its NAV performance stabilise since the COVID-19 driven sell-off earlier this year, although it remains considerably below its 12-month high, suggesting significant recovery potential. Small-cap portfolio managers Simon Moon and Fraser Mackersie point to the robust balance sheets of the companies they own, many of which have continued to pay dividends while some UK blue-chips have cut payments; they have also added to their own holdings in AIF given the attractive 8.8% dividend yield. In the income portfolio (c 25% of assets), managers Chun Lee and Robin Willis have taken advantage of better-value sterling bonds and high-yielding investment companies at deep discounts, helping AIF to support another year of dividend growth (part-funded from reserves).
AIF's discount has narrowed to 13.5% from 25.3% in July 2020, although it remains well above longer-term averages of 8.2-9.7%. The fund is set to deliver annual dividend growth of 10.6% for FY20 (this will be partly funded from its significant reserves) and currently yields an eye-catching 8.8%.
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