Aberdeen Asian Income Fund (AAIF) has continued last year’s strong performance with a 28% investment return in the first half of the year largely driven by technology and artificial intelligence stocks.
Shareholders in the £452m investment company enjoyed a 30.9% total return in the six months to 30 June as the big gains of Taiwanese and South Korean semiconductor and hardware holdings stoked investor demand.
Key contributors were chip designer MediaTek, whose shares are up 175% over one year; AI server materials supplier Taiwan Union Technology which has soared 343% over 12 months; and memory chip manufacturer Samsung Electronics, up 283% over the same period. Other winners were advanced packaging and testing providers such as Grand Process Technology, a new holding, and ASE Technology.
In response, AAIF shares narrowed the gap, or discount, to the value of the trust’s investments by 1.9% to 5.7%, boosting the return to shareholders, which amounted to 60.1% over one year to 30 June.
All this beat the 25.7% total return from the MSCI AC Asia Pacific ex-Japan index and means shareholders have made as much in six months as they did in the whole of 2025.
Last year saw AAIF deliver a 22.2% underlying return, again mostly generated from tech companies benefiting from the surge in AI spending. As we reported, that converted to a 30% shareholder return due to the discount narrowing and outperformed the benchmark’s 21.3%.
The accelerating share price paused last month as tech stocks sold off on concerns about the sustainability of gigantic AI spending. Nevertheless, shareholders are currently 99% and 89% up over three and five years, ahead of the MSCI index’s 77% and 68% returns.
The trust’s extended outperformance also came with good news on the dividends supporting its 6.3% yield. Since the start of last year, AAIF has paid 1.56% of net assets each quarter. It is prepared to dip into reserves if revenues fall short but did not need to as the first two of this year’s dividends of 4.47p and 5.55p comfortably covered by 12.36p earnings per share, up from 8.75p a year ago.
Before last month’s sell-off in AI and semiconductor stocks, Aberdeen fund managers Isaac Thong and Eric Chan repositioned the portfolio, adding some financials, industrials and consumer companies they believed offered attractive growth and income prospects to complement the ongoing opportunity in technology.
Among the additions were Australian gaming company Aristrocrat Leisure and the flotation of Vietnamese electronic retailer Dien May Xanh. In technology, Hon Hai Precision, the world’s largest electronics supplier was introduced. AAIF remains heavily exposed to technology with over 13% in its top holding, TSMC, the world’s biggest chip foundry maker, and 11.7% in Samsung Electronics at 30 June.
The changes were partly funded by selling real estate positions such as Centuria Industrial, Centurion Accommodation and Charter Long Wale real estate investment trusts.
Our view
James Carthew, head of investment company research at QuotedData, said: “Aberdeen Asian Income Fund had a great start to 2026, capturing some of the extraordinary gains delivered by Asian companies benefiting from the AI capex boom. While it gave back a bit of that in July, August has been a better month. I find it encouraging that the manager has been recycling money from IT positions into sectors such as financials, industrials and consumer, which will hopefully help provide another bout of performance in time.”
