PDO - ACP: Strained Distribution But Okay If You Can Handle The Risk

2024-06-02 06:47:58 ET

Summary

• The abrdn Income Credit Strategies Fund has one of the highest yields among fixed-income funds, leading to speculation about the sustainability of its distribution.
• The fund's performance compared to the global bond index suggests potential concerns about its ability to sustain its distribution.
• The fund's asset allocation and leverage ratio are in line with its strategy and peers, and its geographic diversification is a bit better than most global funds.
• The fund has apparently reduced its weighting to the American bond market, which works pretty well for our attempts at diversifying our assets internationally.
• The fund's distribution coverage appears strained, as there are periods when it is covering and periods when it is not. We need to keep an eye on that going forward.

The abrdn Income Credit Strategies Fund ( ACP ) is a closed-end fund that income-seeking investors can employ as a method of achieving their goals. This fund has something of a mixed reputation among investors as it has one of the highest yields currently available from any fixed-income fund, and this has led numerous investors to speculate about how sustainable its distribution is likely to be. We can see this situation very clearly by comparing this fund's current 18.10% yield with that of peers:

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