AIF’s objective is to provide shareholders with a high income and the opportunity for capital growth. The portfolio is split into two pools: one (c 70–80% of assets) is invested in UK small-cap equities; the other is an income portfolio containing fixed-income instruments, convertibles and high-yielding shares in other investment companies. Performance is measured against a composite benchmark made up 75% of the Numis Smaller Companies (excluding investment companies) Index and 25% of the ICE BofAML Sterling Non-Gilts Index.
Acorn Income Fund (AIF) has seen its NAV performance stabilise since the COVID-19 driven sell-off earlier this year, although it remains considerably below its 12-month high, suggesting significant recovery potential. Small-cap portfolio managers Simon Moon and Fraser Mackersie point to the robust balance sheets of the companies they own, many of which have continued to pay dividends while some UK blue-chips have cut payments; they have also added to their own holdings in AIF given the attractive 8.8% dividend yield. In the income portfolio (c 25% of assets), managers Chun Lee and Robin Willis have taken advantage of better-value sterling bonds and high-yielding investment companies at deep discounts, helping AIF to support another year of dividend growth (part-funded from reserves).