Acorn Income Fund Ld Edison issues review on Acorn Income Fund (AIF)
October 03 2017 - 6:05AM
RNS Non-Regulatory
TIDMAIF
Acorn Income Fund Ld
03 October 2017
London, UK, 3 October 2017
Edison issues review on Acorn Income Fund (AIF)
Acorn Income Fund (AIF) targets a high income and the
opportunity for capital growth by investing the majority of its
assets in smaller quoted UK companies, with up to 30% in a
portfolio of higher-yielding securities such as bonds, preference
shares, investment companies and structured notes. Its long-term
performance record is compelling, with 10-year share price and NAV
total returns of c 270-280%, and it also ranks second or first in
its peer group (AIC UK Equity & Bond Income) for NAV total
returns over one, three and five years. The fund is structurally
geared using zero-dividend preference shares (ZDPs), which were
refinanced in early 2017, extending their life until 2022 at a much
lower gross redemption yield of 3.85% (previously 6.5%), meaning
ordinary shareholders feel the benefit of gearing more quickly in a
rising market. Hedging may be used to reduce risk in either
portfolio, and AIF's ordinary shares currently yield c 4%.
At 2 October, AIF's ordinary shares traded at a 5.4% discount to
cum-income net asset value, while the ZDPs stood at a 3.2% premium.
The ordinary share discount has been relatively stable in recent
months at c 4-6%, having experienced a period of greater volatility
since early 2016, and has the potential to narrow further given the
exceptional long-term performance record. AIF has a dividend yield
of c 4%, which compares favourably with its closest AIC sector
peer.
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