New Survey Shows Investors Underutilizing CEFs to Access Emerging and Frontier Markets
Philadelphia, June 21, 2018 - According to a recent study of more than 100 U.S.-based investment professionals conducted by Aberdeen Standard Investments, the majority of investors (57 percent) have a positive outlook for closed-end funds (CEFs) over the long term.
Through year-end 2018, financial professionals see the greatest opportunity in domestic markets (43 percent), followed by emerging and frontier markets (37 percent) and international developed markets (18 percent).
“Investors are understandably focused on domestic markets given the strong performance over the last nine years,” said Rennie McConnochie, Head of Global Banks at Aberdeen Standard Investments and President of The Closed-End Fund Association (CEFA). “However, we believe investors should begin to position their portfolios for a cycle turn and look to access other opportunities around the globe.”
Though investors signified that they see strong opportunities in emerging and frontier markets, only 26 percent indicated that they use CEFs to access these markets. Six out of ten investors (62 percent) employ CEFs to invest in domestic markets while the remaining 13% use these vehicles to invest in international developed markets.
“We believe it’s beneficial to diversify away from one particular market, region and asset class through closed-end vehicles,” said McConnochie. “CEFs can be purchased today at relative discounts to their net asset value while providing stable income over the long term, making them more attractive than ever for investors truly looking to diversify their portfolios.”
Respondents are divided on the most attractive benefits of closed-end funds to investors, indicating that purchase discounts to net asset value (27 percent) and long-term stability and income (26 percent) are the most attractive qualities. Investment professionals also expressed that volatility in share prices (34 percent) can be the biggest deterrent when speaking about CEFs with clients, reflecting the need to better educate the market on their benefits.
To learn more about the various closed-end funds Aberdeen Standard Investments offers, visit: cef.aberdeen-asset.us/.
The Closed-End Funds Survey was commissioned by Aberdeen Standard Investments and an independent party. It was conducted on May 17, 2018, at Capital Link’s 17th Annual Closed-End Funds & Global ETFs Forum. The data are based on responses from 102 financial professionals and investors.
Notes to editors
- Aberdeen Standard Investments has relationships with around 500 financial sponsors across approximately 1,000 funds globally.
- Aberdeen Standard Investments is a leading global asset manager dedicated to creating long-term value for our clients, and is a brand of the investment businesses of
- Aberdeen Asset Management and Standard Life Investments.
- With over 1,000 investment professionals we manage $684.6 billion* of assets worldwide. We have clients in 80 countries supported by 50 relationship offices. This ensures we are close to our clients and the markets in which they invest.
- We are high-conviction, long-term investors who believe teamwork and collaboration are the key to delivering repeatable, strong investment performance. We are resolute in our commitment to active asset management.
- Aberdeen Standard Investments is the asset management business of Standard Life Aberdeen plc, one of the world’s largest investment companies.
- Standard Life Aberdeen plc is headquartered in Scotland. It has around 1.2 million share holders and is listed on the London Stock Exchange. The Standard Life Aberdeen group was formed by the merger of Standard Life plc and Aberdeen Asset Management PLC on August 14, 2017.
*Standard Life Aberdeen AUM/AUA is US$778.8 billion as of December 31, 2017.
Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments. In the United States, Aberdeen Standard Investments is the marketing name for the following affiliated, registered investment advisers: Aberdeen Asset Management Inc., Aberdeen Asset Managers Ltd., Aberdeen Asset Management Ltd., Aberdeen Asset Management Asia Ltd., Aberdeen Asset Capital Management, LLC, Standard Life Investments (Corporate Funds) Ltd., and Standard Life Investments (USA) Ltd.
International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks, and difference in accounting methods.
Closed-end funds are traded on the secondary market through one of the stock exchanges. The Fund’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 fund’s portfolio. There is no assurance that the Fund will achieve its investment objective.