TORONTO, ON / ACCESSWIRE / June 21, 2021 / Please see below for a link to the monthly factsheet for the Aberdeen Asia-Pacific Income Investment Company Limited (TSX:FAP), including performance and portfolio composition as of May 31, 2021.
Please also find below commentaries from the Fund Company's Portfolio Manager, Adam McCabe.
The Aberdeen Asia-Pacific Investment Company Limited returned -1.3% on a net asset value basis for the six months ended April 30, 2020, versus the -5.8% returns of its blended benchmark.
The single largest contributor to the negative total return was the strength of the Canadian dollar, especially the performance in the latter part of the six-month review period. Nevertheless, the currency impact from the use of leverage, which is drawn-down in US dollars had a positive impact as the currencies in the Asia Pacific region, in which the Company invests, rallied against the US dollar.
Over the medium-to-long run, the Company's use of leverage has contributed positively to the performance of the net asset value, and it supports the Company's generation of income as the Company continues to benefit from a positive interest rate differential between the interest income on the investment portfolio and cost of the leverage. Additionally, as the Company has entered into a number of interest rate swaps to fix the cost of leverage over the long-term investment horizon, the Company experienced a positive impact from this strategy during the rise in yields.
The rise in bond yields did emerge as a headwind for the performance of the bond investments held by the Company, but the ongoing narrowing in credit spreads more than offset the negative contribution.
The Company's net asset value outperformed its benchmark performance, benefitting from the underweight and shorter than benchmark duration exposure across many of the lower-yielding Asian markets and also the emerging market local currency denominated bond markets, while the overweight to the hard currency sovereign credit markets contributed positively. The hedging of US dollar exposure into selected Asian currencies, such as the Korean won and Chinese yuan added value.
The Company invests in bond markets outside Canada and denominated in currencies other than the Canadian dollar. The single largest contributor to the decline in net asset value of the Company was the strength of the Canadian dollar. In the six months ending April 2021, the US dollar depreciated by 7.8% against the Canadian dollar, while Asia Pacific currencies were weaker by between 4.6% and 7.7%, with the exception being the Australian dollar which was up 1.3%.
In Canadian dollar terms, the Bloomberg Barclays US aggregate index returned -10.3%; JP Morgan Global Bond Index - Diversified, Indonesia returned -2.6%; JP Morgan Global Bond Index - Diversified, India returned -6.6%; JP Morgan Asian Credit Index returned - 6.9%. The Bloomberg Barclays Australian Composite returned 0.1%.
Aberdeen Standard Investments ('ASI') is the marketing name in Canada for Aberdeen Standard Investments (Canada) Limited, Aberdeen Standard Investments Luxembourg SA, Standard Life Investments Private Capital Ltd, SL Capital Partners LLP, Standard Life Investments Limited, Aberdeen Standard Alternative Funds Limited, and Aberdeen Capital Management LLC. Aberdeen Standard Investments (Canada) Limited, is registered as a Portfolio Manager and Exempt Market Dealer in all provinces and territories of Canada as well as an Investment Fund Manager in the provinces of Ontario, Quebec, and Newfoundland and Labrador.
Closed-end funds are traded on the secondary market through one of the stock exchanges. The Company's investment return and principal value will fluctuate so that an investor's shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the company's portfolio. There is no assurance that the Company will achieve its investment objective. Past performance does not guarantee future results.
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Aberdeen Standard Investments Inc.
SOURCE: Aberdeen Asia-Pacific Income Investment Company Limited