Putting aside the unfortunate name, I do like the look of abrdn (LSE: ABDN) shares. And I’m seriously thinking of adding the investment manager to my retirement portfolio. The abrdn share price is not doing too well right now, losing 40% over the past 12 months.
It looks like it’s picked up a bit from a recent bottom. But shares do that, and it’s probably as likely to head further down again.
I’m not interested in bottoms anyway, or trying to time my investments. And there’s a key thing that I think makes me a contrarian — I don’t care what current conditions look like or what the market thinks about them.
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Not retiring yet
Why would I care if I’m not planning to retire for many years yet? When I do come to retire, it simply won’t matter what share prices looked like a decade previously.
Just because abrdn shares have fallen, though, doesn’t mean they’re necessarily a bargain now. And I do see some good reasons for the decline.
Investing shift
A lot of investors have been shifting their wealth to things they see as safer these days, and away from stock market crash risk. That means investment managers are finding it harder to retain clients, and are suffering outflows of funds.
In addition, when shares are performing poorly, managers like abrdn suffer a different way too. Some of the fees they charge are performance-based. And, well, when performance is poor, so are the fees.
Long term
Investment managers tend to rise and fall along with market performance, but often with a little more volatility. And in the current climate, I don’t expect to see good performance in the next year or so.
But I have a long-term horizon, and I’m not investing for this year, next year, or any time soon. I think the stock market will outperform other investments in the long run. And it follows that I expect investment managers to profit from that.
Dividend yield
Oh, and did I mention the dividend yield? Current forecasts have it at a whopping 9.7%. And if dividends like that won’t help boost my retirement income, I don’t know what will.
Of course, if current conditions go on for too long, abrdn’s income could suffer, and that dividend might well fall. If that happens, investors might sell off some more and drop the share price even further.
Future dividends
But I’m not really worried about this year’s dividend, or next year’s. No, I’m thinking about long-term dividends.
So what I’m really looking at is buying into all those future dividends, but at today’s low share price. If I do that, I hope to lock in better effective long-term yields than if I wait until the share price recovers.
So will I buy abrdn shares? Well, I’m also looking at M&G, which is in a very similar position. But if abrdn still looks this good when I have my next investment cash saved up, I think I will buy.
