A global income podcast
In this podcast we are joined by Iain Pyle, manager of Shires Income, Bruce Stout, manager of Murray International Trust and Yoojeong Oh, manager of Aberdeen Asian Income Fund. They discuss how they have managed their respective income mandates in 2020, as well as the prospects for income seekers in 2020.
Recorded on Thursday 3rd December 2020.
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Interviewer: Hello, and welcome to the latest in the Aberdeen Standard Investment Trust podcast series. On today's income panel, we have fund managers Bruce Stout, Yoojeong Oh and Iain Pyle to talk about how they've managed their income mandate this year, and the prospects for 2021. Welcome, everyone. Now, Bruce, we'll start with you. It's been a tough year for income seekers. I wondered if you could give us a global view on the dividend picture, which areas have been resilient and which have been weaker.
Bruce: Yeah, tough is one word to describe it. It is probably the hardest year, I think we've ever seen in terms of income in global financial markets. We were just having a look back and dividend recessions are actually not that common in history, there's probably been about half a dozen in the last hundred years. But when they're concentrated all around the world, like they have been in the last 12 months, they are very deep and very painful. What we saw in terms of resilience, I guess, was sectors such as telecommunications continued to be okay. Consumer staples on the whole were good and tech companies that pay dividends, the ones that we're interested in, things like Taiwan Semi, and Samsung and GlobalWafers have continued to pay good dividends. As did healthcare and I suppose one of the surprise areas of strength for dividends was in commodities, particularly things like copper and iron ore, and also lithium. But where dividends were weak, they were very weak. And we saw draconian cuts in banks, in energy companies, insurance. And the more sort of consumer discretionary industries such as airports, travel and tourism. The final thing I would probably say about the past year for dividends is it's really been an attack on all fronts, because we've had companies that have been leveraged, and they've had no cash and had to cut. Thankfully, we don't have exposure to those types of businesses. But we've also had some companies where they've had strong balance sheets and good cash, but they’ve still cut because of the uncertainty. And then the more difficult areas have been areas where regulators have demanded cuts in things like banks and insurance, which make up about 25% of global dividends in the past so that was tough. And politicians have weighed into the argument as well, demanding cuts in some partially state owned companies. So an absolute tsunami for dividends over the past 12 months in a tough environment to negotiate.
Interviewer: And what are you seeing now from companies as there's more visibility on earnings? Are you starting to see some dividends restored? And is that focused on certain sectors?
Bruce: Yes, it's quite interesting. I mean, we don't blame any companies for suspending or cancelling dividends last year because there was so much uncertainty, it was very difficult for them to get trading statements, it was very difficult to see what was happening. And of course, they wanted to maintain liquidity. And, and that was just the nature of the environment that we were in. But there's a bit more confidence coming back to some visibility and transparency in recovery, particularly in Asia and emerging areas that don't have the overhang perhaps that the developed world has. And we’ve seen a couple of specials actually recently, one in Indo Cement in Indonesia and Sociedad Quimica Y Minera in Chile, and we've had one or two companies that are talking about restoring the dividends in the first half of next year. So hopefully it will be a more positive outlook the next year when we start to see recovery take hold.
Interviewer: Okay and finally, do you have any views on the outlook for 2021? Any themes you have picked up for that?
Bruce: Yeah, I mean, apart from the general recovery in an environment where people might start to get back to normal, I think there are two aspects here that are very, very important for the future of dividends going forward. One is corporate balance sheets, and that the companies are strong enough to invest and to return more cash to shareholders, and there's absolutely no doubt on a global basis that leads us to Asia, because the debt to equity, in general in those areas is much, much lower than a place like the United States, for example, where companies have been aggressively borrowing in a low interest rate environment for the last five years. And debt to equity on the S&P 500 is up about 70%. So the affordability’s not there in the US and the will’s not there as well. But the other thing that's also very important is the shape of the yield curves in various countries going forward from here, because, again, in a place like Asia where a 10 year bond might be 4 or 5% in India and Indonesia, then an equity yield of 4 or 5% is perfectly normal. And those are the sort of levels that are very attractive. But in the developed world where 10 year bond yields are practically zero, then it will be very interesting in the next five years, to see at what level companies restore dividends, do they go back to the traditional 4 or 5%? Or will they be lower? And that's a question we can't answer at the moment. But it will be very important for the future level of dividends going forward.
Interviewer: Okay, great. Thank you, Bruce. Yoojeong, what's been the picture on dividends in Asia?
Yoojeong: Yeah, so I can just pick up on some of the points that Bruce has just made. As one of the fastest growing areas of the world, Asia really entered the crisis with a lower base as far as dividend yields were concerned. And so dividend cuts within the region have been more modest relative to more developed regions. And of course, Asia has sold down too in March and April. And we've also seen lockdowns and travel restrictions here as well, which hurt the tourism related businesses in particular. However, the recovery in markets since then has been very strong, earnings growth, and hence dividend growth, for the region is driven by consumption. And that hasn't gone away. So favourable demographics, and the rising middle income story remains very much intact.
Interviewer: And what steps have you been taking to kind of navigate this environment, sort of steer the portfolio to the winners and avoid those that are cutting?
Yoojeong: When the pandemic hit, I didn't think there was much time to try and reposition the portfolio. But fortunately, less than 5% of the Asian Income Fund was invested at the time in companies who ended up suspending their dividend. And these were, as Bruce mentioned, those that were mandated by the regulator rather than a result of financial distress. Turnover in the fund remained low during the year. So we're still looking below 20%. And the reason we were able to avoid the bulk of dividend cancellation is due to our investment process, which focuses on good quality companies that have strong business franchises, and cash flow generation along with robust balance sheets. We spend quite a fair bit of time looking at ESG factors as well, and how resilient these frameworks are, which often tie into prudence and that culture of respecting total returns for minority shareholders as well. So dividend growth on an absolute basis is lower this year, as expected given the disruption seen to earnings growth over the summer months in particular, but actually, earnings recovery in Asia has been quick. The Asian Income Fund has enjoyed some dividend increases this year as well, as well as special dividends and cash returns from the companies that we invest in.
Interviewer: Okay, and where are you finding those sources of resilient income? I mean, are they across multiple sectors? Or do they tend to be in certain areas?
Yoojeong: Yeah, so we're looking for resilient income and income growth. And again, as Bruce touched upon at the beginning, Asia is really home to the global leaders in technology, and that's been a huge beneficiary of the working from home trade that we've seen this year. So whilst we don't invest in the internet stocks that don't pay dividends, we've banked some pretty strong share price gains from the semiconductor manufacturers TSMC in Taiwan, and Samsung Electronics in Korea to sit on cash balance sheets and they pay good dividends. And they’re looking at a strong cyclical recovery as we head into 2021 as well. So these two stocks are our largest positions within the fund. But we also invest selectively in the supply chain as well, where we see dominant market share and dividend growth. So an example there would be the mid cap company GlobalWafers in Taiwan, who make the silicon wafers that are the raw material for both Samsung Electronics and TSMC. And, as mentioned earlier there, consumption remains well supported in Asia. And we've benefited from dividend growth this year from a more diverse range of sectors than just technology. So we've seen special dividends from convenience store operators in Hong Kong, to e-commerce companies in Taiwan. And we've been invested very broadly across petrol station REITs in Australia, to equipment suppliers for COVID testing kits in Singapore. So there's been a lot of positive dividend news over the year as well from a wide range of sectors. And we're able to collect income from this broad range of sectors and markets, which has been particularly important during these volatile times such as the one we’ve all lived through this year.
Interviewer: Great. Okay. Thank you, Yoojeong. Coming to you Iain, now the UK has definitely been one of the toughest areas this year. I wonder if you could talk a bit about how you've navigated this environment?
Iain: Yeah, of course. So with the UK being a fairly income focused market compared to Asia, I think it's felt dividend cuts this year, more than many other places. And I think dividends for the for the market are down about 45%, which is obviously a pretty significant cut. In terms of how we've navigated it in Shires, I think we came into the cuts in a reasonably good position, the weighting towards higher quality companies, and a strong position in preference shares where dividends have been absolutely rock solid has definitely been helpful. And it means we've had less exposure to the sectors that Bruce mentioned where you've seen the bulk of the cuts, but clearly along with any income portfolio in the UK, they haven't been immune from dividend cuts this year. And in terms of managing through those, we've tried to bucket the dividend cutters in three sectors. So first of all, you've got the ones where balance sheet is okay, cash generation still okay, but there's a regulatory requirement to suspend dividends. And that's primarily the banks in the UK, so in our portfolio, things like Standard Chartered and Close Brothers. And in both those cases, actually, cash generation has remained strong, capital positions remain in a pretty good place. And we're confident that when dividend bans are lifted, hopefully early next year, we'll see dividends resume. So it's fairly easy to sit and hold on to those first kind of companies. The second bucket is the companies where you've got a really sharp, short and hopefully temporary shortfall in cash generation, and they can be things that are consumer facing, something like Howden Joinery selling kitchens in the UK is a good example, where no one is buying a kitchen in the second quarter of this year. There's no cash generation, the right decision is to suspend dividends, but when the market normalises we'd expect cash generation to come back, the balance sheet is in a good situation and dividends will resume and in fact, Howdens is one which has resumed paying dividends already. And again, where we like the companies where they're high quality names, we're going to hold on to those positions and be a bit patient. And the third bucket is a difficult one – it’s where actually, even when the world normalises next year hopefully, there will be some structural change and where balance sheets have deteriorated to such an extent that we don't see income coming back from those companies within an investable timeframe. And we had very few of those in the portfolio but Cineworld is probably an example where that industry may well structurally change. And from an income perspective, it's time to move on. So we've managed, we've managed through it that way. But I think the nice thing is that income within Shires has been down substantially less than the market. So we've come into it in a good position and that has paid dividends.
Interviewer: Alright. And you’ve seen some of the biggest UK dividend payers cut. Is there a sense that the pandemic could reshape the dividend landscape in the UK, moving away from some of those old economy companies that have dominated in previous years?
Iain: I think there is certainly going to be a little bit of a shuffling of the pack. If you think about the big income constituents of the index historically, then actually a lot of those names have been very resilient. So, utilities, health care, tobacco, telecoms and even the miners actually have all been very resilient through this year. The two areas where we've seen dividend cuts have been the banks and the oil companies. And the banks, I think is, a temporary thing, it will come back probably at a slightly lower level than it was pre crisis. The oil companies is a more of a structural thing, I think that they transition through an energy change over the next few decades. And if you look at the top dividend payers this time last year, then the top five, or the top three, were HSBC, Royal Dutch Shell and BP and they have now all slipped out of the top five. So that's obviously quite a big shift in the makeup of income within the UK market.
Interviewer: Okay, and a question to everyone now, about the extent to which you've had to draw on reserves to shore up dividend payments to shareholders this year, and the impact that's had on reserves going forward. Bruce, could I put that to you first?
Bruce: Yeah, so obviously, the very attractive aspect of the investment trust as a business is that the trust has reserves in order to cover this and Murray International has a lot of reserves, I can't give you the exact number for the simple reason that I don't know it yet. The year end is the end of December. But the board have already committed to maintaining the dividend, you know, through this difficult year. And over the last 5 years, or 10 years, or whatever we've constantly been adding to the services and in fact have added 30 million in the last 10 years. So that’s what the reserves are there for - they’re there for a rainy day. And this has been an absolute downpour this year. So hopefully, you know, next year, we'll get back into a more stable situation. And we'll just use whatever reserves we have to use this year to through it.
Interviewer: Okay, and Yoojoeng, same question to you.
Yoojeong: Yep, very similar for Asian Income. We started 2020 with close to two thirds of dividends covered by reserves, so a very healthy safety buffer that we’ve built up over the years. For the past 12 years, the Asian Income Fund has grown the dividend per share paid to shareholders. And we would also very much like to maintain this trend, even during this downpour that Bruce alludes to. So this will mean we will dip into reserves for the first time this year, but it will still only be very modest, given some of the dividend trends I spoke about earlier. And the majority of the reserves will remain untouched for future rainy days.
Interviewer: Great. And finally you Iain?
Iain: Yeah, very much the same again for Shires - we came into this year with around one year of dividends covered by reserves. And this year, clearly, we're going to have to draw down on that slightly. But actually, it'll be at a pretty low level and going forwards I think we – we’ve got an outlook which will hopefully allow us to build back towards coverage within the next few years. So the drawing should be relatively modest.
Interviewer: Great. And then just finally, Iain, I'll come to you first on this. If you had sort of one or two things that an income seekers should really bear in mind for the year ahead, what would they be?
Iain: I think, have a little bit of patience on income. As Bruce alluded to earlier, a lot of companies are going to come out of this year with a balance sheet slightly more stretched. And we're probably going to go into a restocking cycle, which is going to have a draw on cash through next year. And therefore it might take a little bit of time for companies to restart dividends and to get dividends back up to prior levels. So we'll need to be patient. That doesn't mean those aren't very good investments and will still generate a good level of income. But we're not going to snap back to 2019 level straight away. And also, I think be aware of a bit of a change of mix of how we earn income going forwards, in that the sources of income will be different as we've already discussed. And we'll probably see a shift away from high levels of ordinary dividends to more something more flexible going forwards because companies will not want to put themselves in a position where they need to cut anytime in the near term. So those things we need to think about as investors but hopefully with dividends, we're going to be in a period where we can see some decent dividend growth over the next few years and that's actually when income as a style performs better.
Interviewer: Okay, great. Yoojeong, would you add anything to that?
Yoojeong: Yeah, so there's a lot of macro stories coming out that people are focusing on. We're talking about vaccines, we're talking about all this - all these stimulus measures globally unwinding and also the risk of inflation as we talk about trade frictions, particularly impacting regions of Asia, with supply chains having to reorganise as a result of that, so these are all things that markets are worried about. And we are worried about too, as well. But in the context of that, in the context of the macro noise, I think what we have consistently done over the past 10 plus years is really stick to what we do. And that's to continue to invest in good quality companies that are generating strong cash flows, who can support good dividend yield, as well as dividend growth. And that will hopefully enable us to continue delivering a good total return package to shareholders in Asian Income.
Interviewer: Great, thank you. And a final word from you, Bruce, if I could on that.
Bruce: Yeah, I guess – one thing that we've learned over the years is that when you have concentrated sources of income, you’re always very vulnerable. So it's something that at Murray International we've tried to avoid for a long time and, and the world has changed to the point where there are many more companies and markets that have embraced total return to shareholder and do pay higher and growing dividends, perhaps the US is the one anomaly there. So we will continue to focus on diversification because diversification is key in terms of countries and sectors, and different types of businesses, so that you have a spread of income sources throughout the portfolio. And it's not just dependent on one sector or one industry where if something happens, then you get into difficulty. So diversification for us continues to be key. Not by yield, but by good balance sheets so our dividends can grow.
Interviewer: Great. Okay. Thank you everyone for those insights today and to our listeners for tuning in. You can find out more about the Aberdeen trusts at www.invtrusts.co.uk and please do look out for future podcasts.
This podcast is provided for general information only and assumes a certain level of knowledge of financial markets. It is provided for information purposes only, and should not be considered as an offer, investment recommendation or solicitation to deal in any of the investments of products mentioned herein, and does not constitute investment research. The views in this podcast are those of the contributors at the time of publication and do not necessarily reflect those of Aberdeen Standard Investments. The value of investments and the income from them can go down as well as up, and investors may get back less than the amount invested. Past performance is not a guide to future returns. Return projections are estimates and provide no guarantee of future results.
An update from investment manager Iain Pyle
In this podcast Iain discusses recent portfolio adjustments, his thoughts on the UK equities market and the importance of quality stocks.
Recorded on Thursday 9th July 2020.
Podcasts from Aberdeen Standard Investment Trusts, invest in good company.
Interviewer: Welcome to the latest in our Aberdeen Standard Investment Trusts podcast series where we catch up with our investment trust managers to discuss how the COVID-19 outbreak is impacting their portfolios. Today we welcome Iain Pyle, manager of the Shires Income Trust. Hi, Iain. Now, let's start with looking at markets. You know, they've recovered a lot of their capital value, but there's still plenty of uncertainty on the income side. What are you seeing among the companies in your portfolio?
Iain Pyle: Yes, good morning Cherry. I think companies everywhere still face a huge amount of uncertainty and that's inevitable after such a big crisis-like event as COVID-19 . But I think we are at the point where generally the uncertainty is starting to reduce rather than increase, and most companies are able to look through to the other side of the crisis. So there will obviously be lots of debate and variation about how quickly companies recover, but generally they’re starting to look through to next year and things being more normal than they are right now. Obviously, that varies hugely by sector, so there are still sectors where a lot is very unclear particularly travel and leisure, and the banking sector for example, where you really need to wait and see how the economy reacts to the end of government support to get a view on the outlook, even into 2021. From an income point of view for the companies in the portfolio, generally we try and hold companies that have pretty resilient income characteristics. So they have good balance sheets and they have cash flows which should be resilient despite a short fall in consumer activity. In most cases, we're seeing confidence improving on the outlook and on dividends at the moment. So obviously there's a large number of companies that have cut dividend payments this year, but they're starting to think about how they bring them back next year as activity picks up.
Interviewer: Okay, and did you shift the portfolio in response to the crisis at all? I mean, either selling sectors where the outlook had profoundly changed, or buying up opportunities where the price had fallen?
Iain Pyle: Yes, I mean, it's a slightly difficult crisis because everything happen so quickly to really move the portfolio and take advantage of valuation opportunities. And particularly with an income perspective, where we've seen share prices really fall dramatically often that’s been accompanied by dividend cuts or a marked change in the output of businesses. So we haven't done a lot of trying to pick up companies that have really been punished in terms of share price. What we have tried to do is just shift the portfolio slightly to make the income more resilient because at a time when so many companies are facing curtailed cash flows and having to spend dividends, we want to make sure that the income for the portfolio to the end shareholders is protect as much as possible. So the kind of things we've been doing have been adding to larger stocks with broad based international earnings that don't face balance sheet difficulties or regulatory pressure to cut dividends. So that would be the likes of things like BHP, British American Tobacco, AstraZeneca, GlaxoSmithKline. They’re all stocks where our analysts are fundamentally positive and where cash flows should be pretty resilient and they’ll continue to pay healthy dividends. We've also added to a few high yielding UK names like Direct Line Insurance for example, which is not massively affected by the crisis. And on the other side, I guess the way we funded that trade has been in two ways. Firstly, we've sold some names where dividend prospects have been deeply reduced like HSBC where there's a regulatory block on paying dividends for this year. And then we've also sold down some of the more growthy names in the portfolio that have done very well over the past year, but where yields are low. So that would be the likes of Abcam or LSE, which have been really good performers, but right now valuation doesn't look as compelling as some other things and they don't have the same income as the stocks we’re adding to. So it's really just a shift to make income a bit more resilient and maintain a high level of dividends for shareholders.
Interviewer: Okay, and looking at the portfolio today, are there any sort of major positions you'd highlight - sort of either over or underweights and key themes?
Iain Pyle: So we always try and keep the portfolio sides pretty balanced. The reason being we want that resilience of income and we want to maintain a balance between income and growth in the portfolio. So we tend not to have big factor or sector skews in the portfolio. The one overriding bias we have is to own higher quality stocks. So generally things with higher return on capital, good competitive positions and strong balance sheets. And that hasn't really changed - that's a continuous skew for the portfolio. And you can see that in the factor exposure we have. So generally the portfolio is overweight quality and growth factors and slightly underweight value factors, with the exception of dividend yield. By sector at the moment, I guess we’re slightly biased as you'd expect from an income portfolio. Slightly overweight energy, telecoms, utilities and financials. But in all those sectors, we tend to have that quality bias. So for example, in something like energy, we're overweight effective, but we are doing that through companies that don't have much commodity risk in them. Conversely, we are underweight sectors where there's more limited income, like consumer staples and also industrials, where you have a high degree of cyclicality but you don't really get the yield benefits. When we think about what themes we're looking for at the moment, I think it hasn't really changed since the end of last year to be honest. Those themes should really be ability to deliver growth independent of the macro outlook, defensive income – so strong, resilient cash flows and keeping our eyes open for valuation opportunities so when there is stocks out there with high yields where we actually think this is a chance to buy a quality company and get some yield compression over time - they’re the two things we're looking for.
Interviewer: The trust has an exposure to preference shares to produce the yield . What happened to that part of the portfolio?
Iain Pyle: Yes, so the preference share portfolio makes up between 25% and 30% of the portfolio at any one time. The aim of it is always to deliver a pretty stable capital position, but a high level of income and kind of do the heavy lifting on the income for the portfolio. And what we found through the virus period if you like, it's done its job really. So the preference share portfolio has gone down slightly in value - I think over the five months to end of May it was down by 5%. But that compares to the index down 16%. So it's obviously being defensive as you would hope. And at the same time, where we've seen 45% of companies cut their ordinary dividends in the FTSE, we haven't seen any impact on the dividend payments in the preference shares because they sit above equity in the capital stack and they should continue to pay. So it’s been a really nice position for Shire delivering defensive capital and continuing to pay a really high level of incomes. So it's certainly been helpful through this period.
Interviewer: Okay. You mentioned earlier that you were looking for companies with kind of international dividend streams. You can also invest in companies that are listed outside the UK, I think a small portion of the trust, have you been using that flexibility at all?
Iain Pyle: So we've been using it a little bit. At the moment, we've got five positions that are not UK listed. Obviously, the whole portfolio, even the UK listed names tend to be very internationally exposed in terms of where they earn their money. But that ability to invest in markets outside of the UK gives us a little bit more flexibility. I think it's something we'll probably try and use more going forward, because that challenge of finding income means having that flexibility becomes more useful now than it has been in the past. A good example recently would be we switched some Shell into Total, in the oil majors, and there's a clear steer there to go from one to the other where Shell has cut its dividends. Total are confident of maintaining their dividend, and there's quite a significant yield gap between the two. That ability to invest overseas just allows us to switch from one to the other and take advantage of that yield gap.
Interviewer: Okay, and what about looking at markets more generally. Do you think that market prices today reflect the risks, or does that very much depend on individual sectors?
Iain Pyle: I think it always depends on individual sectors. Generally, markets are really quick to look through the crisis and we've seen that happen really quickly. Valuations are already looking through to 2021 earnings and thinking what is something worth once it recovers from the impact of the virus. So in a sense it’s been remarkably quick, remarkably surprising how quickly the market has come back. And valuation multiples now are above pre-crisis levels. So I think the market is - we may have come through that easy part of the recovery, if you like, and I think the market is maybe not quite pricing in the level of uncertainty we still have as we come out of this downturn. Obviously, that varies hugely by stocks and sector. And I think there's certainly areas where the market is too cautious, and that's where we as active managers can try and add some value.
Interviewer: And what about the gap between the UK and other markets? I mean the UK was looking very cheap, then there was a bit of a bounce. Is it back to looking quite cheap again relative to other markets?
Iain Pyle: Yes, so the UK continues to trade at a pretty meaningful discount for the developed markets, both in terms of earnings multiples and the dividends yield that it generates. To some degree that is justified because it's overweight to lower multiple sectors like energy, mining, telcos which are great for income, but they don't have the same growth potential of tech or healthcare, which in some other markets are more overweight. And at the moment in an environment where you have low interest rates, then that favours the more growthy companies. So it’s natural the UK should trade at a bit of a discount right now. Like I said, that makes it great for income investors, because you're earning a decent yield on it. And even if you do set to adjust the makeup of the index, then UK does still look cheap compared to other markets. So it's a reasonably attractive place to put money right now.
Interviewer: Okay, do you see any further worries over the income side or is most of the bad news in the market now?
Iain Pyle: That’s a good question. I really do think most of the bad news is out there. I think companies have acted pretty quickly to protect balance sheets and to cut dividends. And regulators have given a pretty clear message in, certainly the financial sectors, that they want to prioritise balance sheet strength over dividend payments this year. So I think most of the cuts are out there. There's probably a few companies where we’ve still got to see the dividend cuts come. I think BP would be one in our portfolio that stands out where I think we'd expect to see a dividend cut in the second half of this year. That's something that is in the prices, were expected by the markets. I don't think it will come as a surprise, but generally, most of the dividend cuts have come through. And if anything, as we move through into next year, hopefully we'll see dividends return rather than go back.
Interviewer: And what about the risk management side? I think that obviously that's always been a focus for you and good governance and things like that. But have you tweaked anything about the way you manage risk in response to the crisis?
Iain Pyle: I think the natural bias of the portfolio towards higher quality companies with strong cash flows remains as ever, and that is a great way to control your risk - by buying good companies. The most important thing for us right now is to stay active and to try and engage with our companies as much as we can. So continue to have plenty of calls with management and make sure we understand how the current situation is impacting their businesses. I think when we have those conversations, the things we're focusing on more than we would have done in the past have been the balance sheet, the credit metric, and the cash flow at the moment, and the ability of companies to manage through this crisis and continue to maintain a solid balance sheet and hopefully pay income.
Interviewer: And finally, this has obviously been a bit of a roller coaster for investors. I mean, what reassurance would you give for investors in the Trust at what’s been quite a difficult time?
Iain Pyle: Yes, it certainly has been a roller coaster hasn’t it. I think it must be the sharpest decline in equity valuations and probably one of the quickest recoveries that any of us can remember in markets. What I would say right now is generally the worst is behind us and the economic outlook is improving as we see virus cases decline. It's not going to be a straight line up from here by any means. We can see the risk of second waves. We can see very worrying trends in the US and Brazil and some other countries, for example. But if we look forwards and take a medium to long term view, which is what we try and do in Shires, then we're entering a period where you've got a huge amount of government stimulus and economic support. You've got the potential to see progress on vaccines to put the major risk to the market behind us in the next 12 months. And generally, companies are looking forward and being pretty optimistic. So I think we are - we're not going back to where we were in March, is how I feel it is. And in terms of the portfolio, we remain pretty confident on continuing to pay a very healthy dividend, provided the recovery continues. And that focus on quality companies means we've got things in the portfolio that will continue to grow and deliver for the long term. So I think it's still very attractive, but obviously the income that the Trust is generating is - remains very attractive right now.
Interviewer: Okay, great. Thank you Iain for those insights today and thank you to our listeners for tuning in. You can find out more about the Trust at www.shiresincome.co.uk and please do look out for future episodes.
This podcast is provided for general information only and assumes a certain level of knowledge of financial markets. It is provided for information purposes only and should not be considered as an offer, investment recommendation or solicitation to deal in any of the investments of products mentioned herein, and does not constitute investment research. The views in this podcast are those of the contributors at the time of publication and do not necessarily reflect those of Aberdeen Standard Investments. The value of investments and the income from them can go down as well as up, and investors make it back less than the amount invested. Past performance is not a guide to future returns, return projections are estimates and provide no guarantee of future results.