2024-03-18 06:37:21 ET
Summary
- The ACP fund has performed well, delivering 22% in total returns in the past year based on dual tailwinds of tighter credit and lower long-term interest rates.
- The ACP fund also pays an attractive 17.3% forward yield.
- However, the sustainability of the fund's distributions is a concern, as it has historically under-earned its distribution, with 2.0% p.a. returns over 10 years.
- I would take advantage of 'as good as it gets' credit conditions and sell the fund here.
Back at the end of 2022, I reviewed the abrdn Income Credit Strategies Fund ( ACP ). Although the ACP fund paid a very attractive 17%+ distribution yield, I was cautious on the strategy as I worried the fund's distribution was not sustainable given the earnings power of the asset class. However, since my article, the ACP fund has actually performed very well, delivering 22% in total returns and proving me wrong in the past year (Figure 1)....
Read the full article on Seeking Alpha
For further details see:
ACP: Credit As Good As It Gets (Rating Downgrade)