Markets are evolving fast—and so are the strategies behind them. Inside the latest from Aberdeen Investment Trust, managers step forward with a bold outlook that challenges conventional thinking below:
abrdn New India Investment Trust plc: www.abrdnnewindia.co.uk
The £445m trust that looks to achieve long-term capital appreciation by investing in companies which are incorporated in India or which derive significant revenue or profit from India, with dividend yield from the company being of secondary importance.
Outlook
Rita Tahilramani, Investment Director comments:
“We view the macroeconomic slowdown in India as temporary and cyclical in nature. We have seen the Reserve Bank of India start its rate cutting cycle in February and add liquidity to the market. While earnings growth slowed in the most recent report season, we expect India to continue generating comfortable double-digit earnings growth going into next year.
In view of the global uncertainties brought on by the latest round of widespread tariffs from the US, we are cognisant of the risks India faces. While India should be able to safely navigate the tariffs through negotiations, a potential US recession could trigger a global slowdown while supply chain disruptions caused by the tariffs could see India get caught in the crossfires of an international trade war.
The long-term structural growth story remains intact. The consumer focused financial year 2026 budget is expected to help with middle income consumption demand. There is also emphasis from the government for more public-private partnerships for infrastructure projects, while the ‘Make in India’ manufacturing focus continues with more money allocated to production linked incentive schemes to encourage multinationals to set up production bases in the country.
From a stock picking perspective, we are still finding pockets of good growth and quality across various sectors and sub-sectors, even in this temporary market downturn. The Trust’s downside is well-protected given our quality focus, and our defensive holdings are in a good position in case of profit-taking. Any correction in their share prices would be, in our view, a buying opportunity.”
Shires Income PLC: www.shiresincome.co.uk
The £110m investment trust that looks to invest in high-quality investments for a high, regular income
Outlook
Iain Pyle, Investment Director comments:
“If you looked at market performance from day one to the end of April you would struggle to understand what had happened. Market levels, with MSCI World +0.9% in dollar terms, would tell you this was a staid month. However, intra-month moves tell a different story, with an 11.5% fall from Liberation Day followed by an 18% rebound to the middle of May more reflective of the truth. The level of volatility tells you much about how uncertain the outlook is today. Recent steps by the US administration to reach deals on tariff levels are a move in the right direction and support market levels, but it is hard to argue that the chances of a weaker US economy and of higher inflation have not increased.
That makes me cautious on market levels overall, but for anyone investing primarily outside of the US there is a distinct silver lining. The last month has shown cracks in the US outlook, with consumer confidence weakening and retail investors showing signs of exhaustion. With US indices at very high levels, and allocation to the US at a record, there is a high bar for further moves higher. This, combined with a weaker US dollar (one of the most interesting market dynamics in April was the dollar weakening even as risk increased, a sign its safe haven status is under threat) to increase the attraction of other markets. The UK is one that remains relatively cheap and with better economic data than many expected. If flow drives market direction in the short term, it only takes a small reallocation from the US to be a big inflow to UK markets.”
Dunedin Income Growth Investment Trust PLC: www.dunedinincomegrowth.co.uk
The £450m investment trust, founded in 1873, that looks to select a diverse portfolio of high-quality UK and overseas companies to deliver a resilient quarterly income and long-term capital growth potential.
Outlook
Rebecca Maclean, Investment Manager:
“Following a turbulent month for global markets, uncertainty continues to dominate, with key questions remaining about outcome of US tariffs negotiations, particularly with China, and the health of the US economy. The UK is relatively well positioned amid potential trade disruptions, and the Bank of England is expected to continue cutting interest rates in response to easing inflation. While macroeconomic trends shape the broader landscape, our focus remains on the underlying strength and prospects of portfolio companies, evaluating the financial health, operational performance, and ability of holdings to navigate uncertainty. Despite weaker UK business and consumer confidence, pockets of optimism are emerging, particularly in housebuilding and segments of retail. After a prolonged period of outperformance of UK large-cap stocks, a notable shift in performance emerged in April, benefitting our active positioning in the UK mid-cap sector.
While acknowledging the risks, we maintain an optimistic outlook for the portfolio. Our investment style and positioning faced headwinds last year, but we remain convinced that high quality, sustainable businesses with resilient income streams give the Trust the potential to perform over the long term, particularly so in a more challenging global economic environment. M&A remains a prominent feature of the market and share buy backs provide additional support. We continue to see compelling investment opportunities across all sizes of UK companies and are utilising gearing and overseas allocation to enhance portfolio diversification and return potential. Our focus remains on balancing protecting downside risks to capital while participating in opportunities for upside potential.”
abrdn Equity Income Trust plc: www.abrdnequityincome.com
The £160m Trust that seeks to provide shareholders with an above average income from their equity investment while also providing real growth in capital and income.
Outlook
Thomas Moore, Investment Manager said:
“UK equities remain cheap relative to other markets, setting a low bar for upward share price movements on the announcement of positive news. We see the valuation opportunity as two-fold. Firstly, the companies in the FTSE 100 Index generate 78% of their revenues outside the UK, meaning these are internationally focused businesses that should, but often do not, trade at similar valuations to their global peers. We will continue to seek out these valuation anomalies among large caps. Secondly, the FTSE 250 and SmallCap indexes are far more domestically focused, generating over 50% of their revenues in the UK and therefore far more dependent on the British economy. Household cash flows are in good shape, although consumer confidence remains weak, resulting in a tendency to save rather than spend. After a long period of political uncertainty, investors are looking for signs of a pick-up in economic activity before allocating to domestic stocks.
Regardless of the macroeconomic situation, we will continue to scour the UK market for undervalued stocks with the potential to deliver growth that surprises the market. We are encouraged that we have recently uncovered a large number of companies that have delivered a significant valuation re-rating, either due to better-than-expected results or M&A activity. The identification of these stocks can be extremely powerful for performance, as share prices respond to increased earnings or higher price-earnings multiples. Our portfolio is well diversified, providing a range of earnings drivers. Trading remains solid across the bulk of our holdings, supporting our confidence in the continued progression of our dividend per share.”
