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The North American Income Trust boss says he is confident it can outpace US inflation in medium term

Jayna Rana, inews, September 5, 2022:

After years of outperformance due to the success of growth and technology stocks, both of which feature heavily in the USA’s biggest indices, the country has struggled since the turn of the year.

Inflation has been steadily climbing and we have already seen US central bank, the Federal Reserve raise interest rates four times, with two recent 0.75 percentage point increases in quick succession, in an attempt to counter the fastest pace of inflation seen in over 40 years.

The S&P 500 and MSCI USA are down 1 per cent and 1.5 per cent since January, respectively, while the tech-focused Nasdaq 100 has fallen by almost 10 per cent. The North American Income Trust, managed by abrdn however, is up by 12.3 per cent over the same period.

This is largely thanks to a rotation towards value-centric areas of the market, while growth investing is experiencing its biggest downturn for several years, which has included a sharp fall in technology stocks.

Value back in vogue

NAIT’s US-based manager, Fran Radano (working alongside Ralph Bassett), aims to generate above-average dividend income and long-term capital growth. When we met him a couple of months ago, he said he is confident the trust can provide an income stream that should outpace US inflation over the medium term.

“I would expect dividend growth in the mid to high single digit range, which can already be seen in that a third of the portfolio has grown its dividend by 10 per cent over the past year,” he said.

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