Abrdn Australia Equity Fund (IAF) Stock

IAF has exceeded its EAFE benchmark by 800 basis points in the last 6 months, achieving total returns of more than 24%. The revised inflation expectations and prolonged low interest rate environment may have a negative impact on household finances and Australian banks, which make up a large portion of IAF. Valuations for IAF are now high, reaching a price level that has historically acted as a barrier.

IAF: I Like Australian Equities, But This Isn't The Fund To Invest In Them

The abrdn Australia Equity Fund Inc is a closed-end fund that invests in Australian companies listed on the Australian Stock Exchange. IAF aims to achieve long-term capital appreciation and deliver regular income through dividends received on its portfolio of stocks. The fund has returned a positive return of approximately 7% since last year, but risks remain due to the economic backdrop, high valuations, and political and taxation moves in Australia.

iA Financial Corporation, Inc. (OTCPK:IAFNF) Q3 2023 Results Conference Call November 8, 2023 10:00 AM ET Company Participants Marie-Annick Bonneau - Head of Investor Relations Denis Ricard - President and Chief Executive Officer Eric Jobin - Chief Actuary and Chief Financial Officer Alain Bergeron - Chief Investment Officer Stephan Bourbonnais - Wealth Management operations Renee Laflamme - Individual Insurance and Annuities Pierre Miron - Chief Growth Officer Sean O'Brien - Group Businesses Mike Stickney - Chief Growth Officer of U.S. Operation and Co-Head of Acquisitions Conference Call Participants Meny Grauman - Scotiabank Doug Young - Desjardins Gabriel Dechaine - National Bank Tom MacKinnon - BMO Lemar Persaud - Cormark Paul Holden - CIBC Mario Mendonca - TD Securities Darko Mihelic - RBC Capital Operator Good morning, ladies and gentlemen, and welcome to iA Financial Corporation 2023 Third Quarter Results Conference Call. At this time, all lines are in a listen-only mode.

Australian markets remain pressured by one of the harshest monetary tightening cycles in recent decades. Sticky inflation, despite a worsening consumer backdrop, means the RBA may be forced to extend its cycle of rate hikes. Equities in the region, despite offering great income, aren't cheap, and investing via a pricey active fund like IAF will likely be detrimental to returns.

Despite its high expense ratio, the actively managed abrdn Australia Equity Fund continues to underperform. With persistent inflation also set to extend the monetary tightening cycle, equity valuations could come under pressure. At current valuations, IAF's large-cap portfolio isn't cheap either and will be vulnerable to an expectation reset.