Abrdn has announced the closure of its American Income Equity fund after the largest shareholder divested, taking with them a substantial portion of the fund’s assets under management (AUM).
After this sizable withdrawal, the fund would struggle to compete in the US market at its shrunken size, Adam Shanks, director of Abrdn Fund Managers, explained in a notice issued to investors today (4 March).
He said it could lead to difficulties with buying and selling assets at a reasonable price, compromised investment performance, and proportionally higher costs, meaning the fund is “no longer considered to be commercially viable”.
Shanks said: “Having marketed the fund since its launch we judge that there are no realistic prospects of replacing the investment of the largest investor with new investment.
“Following consideration of the available options, we believe it is in the best interest of all shareholders to close the fund, rather than manage the fund at a size where it does not benefit from the economies of scale, liquidate all of the underlying assets and return the proceeds to investors.”
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The Abrdn American Income Equity fund will officially close on 14 May, but shareholders must decide what they want to do with their investment by 2 May.
Investors can transfer their money into another of Abrdn’s UK fund range before the deadline without paying any conversion charges. Alternatively, shareholders who remain invested will have their money repaid to them three days before the closure date.
The £170m fund is up 154.2% since launching in 2016, trailing 52.3 percentage points behind the S&P 500 benchmark and 23.8 percentage points behind the IA North America sector.
Manager Fran Radano – who has been at the helm of the fund since March last year – will continue to run the closed-ended North American Income trust.
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