Abrdn investment trust managers around the world have issued their latest outlooks — with near-term risks in India, elevated tensions in the Middle East and Ukraine, potential impact of elections, and the “bottoming” of China high on their agendas.

The £445 million Abrdn New India Investment Trust plc looks to achieve long-term capital appreciation by investing in companies which are incorporated in India or which derive significant revenue or profit from India, with dividend yield from the company being of secondary importance.

Abrdn New India investment director James Thom wrote: “India is one of the world’s fastest-growing major economies, backed by a resilient macro backdrop which includes a real estate boom, strong consumer sentiment in urban areas and a robust infrastructure capex cycle.

“Expectations around a good monsoon season would be key for a pick-up in rural demand. The growth story is underpinned largely by supportive policies from the central government as well as a decade of painful but necessary economic reforms. The groundwork laid by these sweeping reforms have put India on a positive economic trajectory.

“Still, India faces some near-term risks, most of which are external. These include potentially higher global energy prices and a slowdown in the world economy. India’s stock market valuations are also a perennial risk — the market is looking stretched in certain areas, especially amongst small-and-mid-cap stocks.

“A lot of India’s valuation premium has been on the back of inherent strength in the economy, but also thanks to the political continuity of the Modi government over the last decade.

“Following the election outcome, the emergence of a coalition government could have some near-term impact on market sentiment that may lead to this premium normalising. Notwithstanding this, the key to taking advantage of India’s promise is bottom-up stock picking that is backed by fundamental research, which aligns well with how we invest.

“We expect our core quality holdings to continue to deliver resilient compounding earnings growth over the medium term, come what may in terms of macro conditions. The portfolio’s consistency of earnings growth remains healthy and the fundamentals of our holdings, including pricing power, strong balance sheets and the ability to sustain margins, remain solid.

“Our conviction in the experienced management teams of these companies was affirmed during a recent trip to India where we met several companies to get more clarity about the situation on the ground.”

The £540 million Abrdn Asia Focus plc holds a “fundamental, high conviction portfolio of well-researched Asian small caps.”

Abrdn Asia Focus portfolio manager Gabriel Sacks wrote: “We continue to be positive on the outlook for Asian small caps. Rates and inflation have likely peaked in the US setting the scene for rate cuts in Asia, albeit the performance of the companies in the portfolio is not reliant on that development.

“The outlook is potentially bright due to the broad-based growth across Asia and the fundamental strength of the companies in the portfolio which are typically leaders in the industries or markets in which they operate.

“Furthermore, the turnaround in the IT and semiconductor cycle, green transition and near-shoring because of geopolitics continue to benefit companies and countries in Asia.

“China is clearly showing signs of bottoming and recent corporate results have underscored the strength of some business franchises. Ultimately, we continue to have conviction in our holdings and their ability to navigate the various crosswinds buffeting markets.

“Over the longer term, we see the most attractive opportunities around some key structural themes in Asia. Rising affluence is spurring growth in premium consumption across several sectors including consumer discretionary and financial services, while urbanisation and an infrastructure boom is set to benefit property developers and mortgage providers.

“Growing technology adoption and integration means a bright future for domestic software and IT services, while Asia’s tech hardware supply chains remain imperative for the rollout of 5G, big data and digital interconnectivity globally.

“In healthcare, Asia is home to a diverse range of companies leading advancements in biotech and medical device technology. The region is also in the driver’s seat when it comes to the green transition with plays on renewable energy, batteries, EVs, and related infrastructure.”

The £450 million Dunedin Income Growth Investment Trust plc looks to select a diverse portfolio of high-quality UK and overseas companies to deliver a resilient quarterly income and long-term capital growth potential.

Dunedin Income Growth investment manager Ben Ritchie wrote: “2024 has seen an evolving balance between improving global growth prospects and an accompanying rise in bond yields. The macroeconomic picture, while still subdued, looks more encouraging than it did at the turn of the year, particularly for the UK where growth is set to gradually improve, inflation moderate and consumer confidence pick up.

“Meanwhile the starting valuation of the market, and the portfolio, reflects low expectations and this could provide the opportunity for strong prospective returns. M&A remains a prominent feature and stock buy backs a helpful support. There have even been some signs of international investors returning. A cocktail of a steady economy, declining interest rates and a softer pound could be very compelling for UK equities.

“That said, risks remain, elevated tensions in the Middle East and Ukraine and the potential impact on energy prices are something to watch and it is likely that strong commodity markets will act as a handbrake on the relative performance of the Trust given our sustainability and quality focus.

“The announcement of an election looks to have been shrugged off by markets, though we will remain vigilant on policy developments.

“We shall continue to seek a balance to our positioning giving ourselves the potential to perform in a range of market environments and seek to participate in new opportunities in good companies with attractive long-term prospects and at the same time focus on those that meet our sustainable and responsible investing criteria.”

The £1.6 billion Murray International Trust plc invests in a high conviction global portfolio built with the potential to grow capital and deliver a strong and rising income.

Murray International co-manager Martin Connaghan said: “Looking ahead, we acknowledge the unpredictable nature of macroeconomic factors and the potential impact of geopolitical pressures and elections on the market.

“However, our primary focus remains on the stock level, ensuring the portfolio is well diversified on a regional and sectoral basis.

“We are committed to maintaining a robust portfolio that can preserve capital and deliver income in periods of market weakness.

“Our strategy is to have exposure to higher-quality businesses with the financial strength to withstand volatility and that are exposed to strong structural drivers for long-term growth.”

The £160 million Abrdn Equity Income Trust plc seeks to provide shareholders with an above average income from their equity investment while also providing real growth in capital and income.

Abrdn Equity Income investment manager Thomas Moore said: “We are positioning the portfolio in stocks where we see the potential for a combination of dividend yield, dividend growth and valuation re-rating.

“While a more stable macroeconomic backdrop would increase the number and breadth of stock opportunities offering all of these characteristics, we are also aiming to identify stock-specific catalysts that should make our holdings less dependent on an economic upturn.

“Many of our holdings generate strong cash flows, supporting both an attractive level of dividends and share buybacks, yet they trade at a meaningful valuation discount to the FTSE All-Share Index. We therefore see a significant valuation re-rating opportunity.

“Our holdings are benefiting from a range of positive catalysts including encouraging company earnings announcements and an increase in the level of M&A activity, with several holdings receiving bids in recent months.

“In addition, interest in UK equities appears to be picking up as macro sentiment improves. Overall, this creates a more positive backdrop for the UK market than we have seen for some time.

“Dividend cover is running at a multiple of 2.5 for the UK equity market, suggesting some cushion for corporates in the event that macroeconomic conditions deteriorate further.

“Our portfolio is well diversified, providing a range of earnings drivers. Trading remains solid across the bulk of our holdings, supporting our confidence in the continued progression of our dividend per share during 2024.”