Income search prompts Aberdeen Distribution fund overhaul

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Income search prompts Aberdeen Distribution fund overhaul

Aberdeen Asset Management is seeking to overhaul its Managed Distribution fund after acknowledging the product’s ability to meet its current income objective is “challenging”.

Under proposals which go to a vote on August 17, the £98m fund would be renamed to Aberdeen Diversified Income and adopt a new investment strategy. The product currently aims to produce both capital growth and an “attractive” level of income.

Changes to the strategy, which generally focuses on UK equities and bonds, would see the fund invest in a wider range of asset classes across the globe.

”The ability of the fund to continue to meet its income objective is challenging given the expected continuation of historically low UK interest rates, declining bond yields and declining dividends resulting from the UK focused benchmark,” Aberdeen said.

“We believe that the fund would benefit from a more global approach to continue its focus on income generation.”

The change would see the fund target a higher level of income via investment in global equities and alternative investments as well as UK-based securities. The portfolio currently has a mid-range annual yield of 3.2 per cent.