Another strong year for Aberdeen Asian Income Fund: big returns, bigger dividends
Aberdeen Asian Income Fund Limited has posted a standout set of full-year numbers to 31 December 2025. Shareholders enjoyed a 30.0% share price total return and a 22.2% NAV total return, beating the MSCI AC Asia Pacific ex Japan Index at 21.3%. The dividend was lifted for the 17th year in a row and the discount narrowed meaningfully as buybacks and sentiment did their job.
Below I break down what moved the dial, what the enhanced dividend policy really means, and where the risks sit for 2026.
Key figures retail investors should know
| Metric | 2025 | Change/Context |
|---|---|---|
| Share price total return | +30.0% | Outperformed the Index |
| NAV total return | +22.2% | Also ahead of the Index (+21.3%) |
| Dividend per share | 16.24p | Up 12.5%; 17th consecutive increase |
| Dividend yield | 6.2% | Based on year-end share price |
| Dividend cover | 0.91x | Part-funded from capital reserves |
| Revenue EPS | 14.73p | Up 29.8% |
| NAV per share | 285.56p | Up 13.6% |
| Share price | 264.00p | Up 20.0% |
| Discount to NAV | 7.6% | Narrowed from 12.5% |
| Net gearing | 4.7% | Down from 7.2% |
| Ongoing charges | 0.92% | Up from 0.85% |
| Market capitalisation | £376.2 million | As at year end |
Quick jargon buster: NAV is net asset value per share. The discount is the gap between share price and NAV. Gearing is borrowing to invest, which can amplify gains and losses.
What drove the outperformance in 2025
Stock picking did the heavy lifting. The team leant into Asia’s hardware side of AI where earnings visibility has been strongest. Taiwan was a bright spot: Taiwan Semiconductor Manufacturing Company (TSMC) remains the top holding at 11.6% of total assets, while ASE Technology and Accton Technology also helped as AI-related capex surged. In Korea, Samsung Electronics benefited as memory prices improved.
China was mixed but improving. The launch of the low-cost DeepSeek AI model supported local AI names, and insurers such as PICC Property and Casualty and Ping An Insurance re-rated from low bases as restructuring progress showed through. Offsetting that, consumer and property-linked names like Inner Mongolia Yili Industrial and Hangzhou Robam Appliances weighed. Underweight Alibaba detracted during its AI-driven rebound.
India was tougher. Markets faltered on tariff headwinds and earnings downgrades, and holdings including Power Grid Corporation, Tata Consultancy Services and Infosys struggled amid a soft patch for IT services. The trust’s lighter country positioning helped, but stock-level weakness outweighed that tailwind.
Dividend policy, yield and cover: the essentials
In January 2025 the Board introduced an enhanced dividend policy: 1.5625% of NAV per quarter, or roughly 6.25% of NAV per annum. That delivered 16.24p for the year in four rising instalments – 3.65p, 3.84p, 4.29p and 4.46p – giving a 6.2% year-end yield.
Two points matter for income investors:
- Cover was 0.91x. Revenue EPS of 14.73p did not fully cover the 16.24p payout, so a slice came from reserves and capital, which the policy allows.
- Revenue reserves stood at £1.5 million after accounting for the fourth interim dividend. Future payouts are linked to NAV, so they can move with markets.
My view: the policy improves visibility and broadens the fund’s appeal to income seekers. The trade-off is lower cover in weaker revenue years, so expect some variability and be comfortable with distributions drawing on capital when required.
Discount management: buybacks doing their job
The discount narrowed to 7.6% from 12.5%. The company bought back £17.7 million of shares, equal to 5.2% of the starting share count, at an average discount around 10%. Management estimates a 0.5% NAV per share enhancement from this activity.
Opinion: that is sensible capital allocation. It supports liquidity and can underpin the rating, though discounts can widen again if markets wobble. The new continuation vote from 2028, every three years thereafter, further aligns governance with shareholders.
Gearing and costs: conservative stance, small uptick in OCR
Net gearing ended at 4.7%, down from 7.2% – modest by trust standards. The £50 million revolving credit facility has been renewed on an evergreen basis with an option to increase to £70 million, giving flexibility without forcing risk. Ongoing charges were 0.92%, up from 0.85%, still competitive for an actively managed Asian income mandate.
How the portfolio is positioned for 2026
The managers describe a “3C” framework: Compounders, Consistent Holdings and Cyclical Companies, balancing durable cash flows with targeted growth. Notable moves:
- New positions in China Resources Mixc Lifestyle Services and Sino-American Silicon Products, plus Medibank Private in Australia as a steady, defensive compounder.
- Exit from Insurance Australia on lower near-term conviction.
- Top holdings include TSMC, Samsung Electronics (Pref), Tencent, SITC International, DBS Group, Alibaba, HDFC Bank, Ping An Insurance, Region Group and ASE Technology. The top twenty account for 60.8% of assets.
They remain selective on AI, preferring upstream hardware and packaging where capex visibility is strongest, and are rotating part of the portfolio into high-quality non-AI compounders to avoid concentration risks.
The investment case and the risks
Positives first:
- Performance momentum: 2025 beat the Index and the trust also outperformed over three and five years.
- Income attractions: a 6.2% yield, 17th annual dividend increase and a clear policy tied to NAV.
- Improving governance in Asia: Korea’s value-up drive and higher payouts in China expand the investable income universe.
- Discount narrowed with buybacks and an active Board. Gearing is conservative.
What to watch:
- Dividend cover below 1.0x and revenue reserves of £1.5 million mean part of the payout may continue to come from capital in some years.
- Style headwinds could persist if cyclical or speculative areas lead. Quality and yield lagged in 2025 even as stock selection won out.
- China’s consumer and property sectors remain a drag in places, and geopolitical risk is not going away.
- Costs edged up to 0.92% and the rating could slip back if sentiment turns.
My take for retail investors
This is a disciplined, income-first way to own Asia’s growth and dividend story. The team’s tilt toward AI hardware, better-governed financials and quality cash generators feels sensible. The enhanced dividend policy has done exactly what it set out to do – lift the yield and attract attention – though you should accept that cover will flex with earnings and some distributions may be paid from capital.
If you want a single trust for Asia Pacific ex Japan with a healthy yield, measured gearing and an active discount policy, this deserves a place on the shortlist. Just go in with eyes open on China exposure, macro risk and the link between NAV and future dividend levels.
Useful dates and where to learn more
- AGM: 12 noon, Tuesday 12 May 2026, 18 Bishops Square, London E1 6EG.
- Online Shareholder Presentation: 10:30 a.m., Wednesday 6 May 2026. Details and monthly factsheets are available at asian-income.co.uk.
