For Income Investors:
Aberdeen Asia-Pacific |  - Co. Spotlights available via RSS feed
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Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk. | | FAX | $6.11 | Why It's Featured: Good yield; a way to diversify outside the U.S.
Keep an Eye On: Quality of investments; governments in Asia/Pacific region. | Dividend Yield | 6.8% | | Dividend/Earnings | N/A | | Financial Strength | N/A | | Div. Date: 7/15 | Ex-Div: 6/28 |
July 8, 2010 - Aberdeen Asia-Pacific Income Fund (FAX-ASE) operates as a closed-end, non-diversified management investment company. The fund primarily invests in Asian, Australian, and New Zealand, the United States, Canada, and western Europe debt securities. Its portfolio of investments includes securities issued by governmental entities, banks, companies, and other entities. Aberdeen Asset Management Asia Limited serves as the investment manager of the fund. Aberdeen Asia-Pacific Income Fund was incorporated in 1986 and is based in Plainsboro, New Jersey.
The fund's primary objective is current income through investments mostly in Asian and Australian debt. It can invest up to 80% in Asia and as little as 20% in Australia. Up to 10% of its assets can be securities rated below B- and up to 35% of its Asian investments can be below investment grade. As of April, 2010, 42.7% of its assets were in Australian securities while Asian securities (which includes New Zealand) had 53.4% of the fund's funds. U.S. securities were 3.7% of its holdings. Dividends are paid monthly. Right now, those dividends are 42 cents a year for a yield of 6.8%. The last dividend was paid on June 15 and was 3.5 cents a share. Management fees are .886% while the expense ratio is 2.2%. Over the last year, the fund had an overall return (cash distributions plus Net Asset Value (NAV) growth) of 17.469%. The fund is currently selling at a 5% discount to its NAV. Earlier this year, the discount narrowed to 2%. The discount averaged 11% in 2008 and was at a premium of 8% only one year: 1994. There's a fair amount of risk in this fund, as you might imagine when the yield is so much higher than most. There's unusual risk here even though 68% of total assets are in debt rated A or better. But that debt comes from the Asia/Pacific region with China, a more stable nation, comprising a large amount of the exposure. There are several smaller, less stable nations included. For example, some of the largest positions in the fund, as of April 30, 2010, were Western Australia Treasury Corp., India Government, Korea Treasury Bond, Republic of Phillippines and Malaysian Government bonds. So the fund is not only exposed to normal economic concerns, but also carries the risk of political issues, even government viability. Management bought shares of the fund in the past when the discount to the NAV was high. That isn't the case now. But it is a factor to consider if the discount grows too wide. Don't expect any purchases at the current levels.
More numbers: Market Cap for the fund is $1.6 billion. In the last 12 months, return on equity was 29.16% while Return on assets was 3.71%. The fund has a beta of .79. In the last 52 weeks, the fund is up 13.36%. The low in the last year was $2.55 and the high was $6.90. Average volume per day is 890,327 shares. This fund will give good income as well as diversification for investors looking for investments outside the U.S. The caveat is that the fund has the flexibility to buy quite a bit of below investment grade securities as well as issues from countries that have experienced political unrest. As always, when the rewards are higher than average, so are the risks. - Company Web site: www.aberdeen-assets.us Ted Allrich |
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