AOD and AGD Fund Update featuring Portfolio Manager Josh Duitz

In this episode, we sit down with Josh Duitz, Aberdeen's Head of Global Income and a Portfolio Manager for both AOG and AGD. Josh discusses the current state of the global equity market and provides an outlook for 2026. 

Transcript

Podcast Transcript

November 2025

Aberdeen Total Dynamic Dividend Fund (AOD)

Aberdeen Global Dynamic Dividend Fund ( AGD)

Mike Taggart: Welcome to the latest podcast for both the Aberdeen Total Dynamic Dividend Fund, ticker symbol AOD, and the Aberdeen Global Dynamic Dividend Fund, ticker symbol AGD. I'm Mike Taggart, Aberdeen's Head of Closed-end Fund Investor Relations. With me is Josh Diutz, Aberdeen's Head of Global Income and Portfolio Manager for both AOG and AGD. Josh, thank you for taking the time to discuss the funds today.

Josh Duitz: Hey Mike, thanks for having me. I love discussing the funds for shareholders, so I'm happy to be here. 

Mike Taggart: Well, both of these funds invest in global equities. So how have the global equity markets been behaving in 2025?

Josh Duitz: You know it's really been exceptionally strong. And I look at it through a few different lenses. The first considering we've had extremely strong markets the past two years, to see another year like this is really remarkable.

And if you think about, especially since where we were in April on Liberation Day, when the markets really got hit, and now we've rebounded and we're up quite a bit since then. And we've talked about in the past that both IOD and IGD are global funds. In the past we've spoken about the diversification of investing outside of the United States over the past decade or so. You know, the US markets generally have been much stronger than international markets. But prior to that, it was kind of split. You'd have the US outperforming for a year or two, and international markets outperformed for you too. And we haven't really seen that recently until this year. And when you look at international markets on a currency just as basis they've outperform the Euro Stock 50 Japan Hong Kong. And even if you look at an absolute basis without even the currency, you markets in the UK and in Germany and Italy, Japan, Hong Kong have all outperformed the US.  

So it's really a good place to be to have a global portfolio. And you have that first application. If I could just add one more thing being we are a dividend focused fund. You know, dividends continue to grow globally. This year they'll be high single digits. And next year we're actually expecting another 7% growth in dividends as well. 

Mike Taggart: And you've kind of touched upon what I was going to ask you next. Both funds, you know, they have an investment objective of seeking high current dividend income. So how does that influence your portfolio management when you're constructing the portfolios?

Josh Duitz: Dividends are at the core of what we do, right? Historically, stocks that pay dividends and grow their dividends outperform. And we think that will continue. But we're always looking at total return. And I just like to separate us out from other dividend paying funds because I think there's an important distinction. There's several ways to have a high dividend yielding fund. One, you could sell covered call options. When you do that you're limited upside because you sell on the covered calls. Number two, you could only focus on high dividend paying stocks. If you do that generally when stocks have a high yield, it means either they've got X growth generally or they're going to cut their dividend. And that's not good for total performance. Or three you could focus on certain sectors. And then you're only focused on utilities or consumer staples that have higher dividends. We do something called dividend capture which allows us to have a much more diversified portfolio. So we like that because that allows us to invest in tech stocks, for instance, and try to grab some of the performance from artificial intelligence.

In addition, we don't use leverage. Now, other funds use leverage to boost a yield. We believe that investors who are investing in dividend funds are looking for more stability and to be a bit more defensive. So having leverage is great on the upside. But when the markets start going down, as we saw in 2022, if you have leverage, that just exacerbates that fall.

So we don't have any leverage and we really like that. And again we talked about dividends being the core. But really the key is always looking at the fundamentals of the company. If an analyst or someone pitches to me a stock that has a high dividend yield, as a first point I should be interested in. I'm usually not interested in.  Any company that we're looking at.

We're looking at the growth prospects. Are they going to be able to grow their earnings, grow their free cash flow, grow their dividends. So we're looking at debt metrics or looking at the fundamentals of the company looking at valuations, how they compare to other companies within the industry. How do we compare on the fundamental level of where they've traded in the past. So the key to having a good total return is invest in companies that have dividends, grow their dividends and then attractive valuations. So total return is what we're looking at every single time we're invested in the company. 

Mike Taggart: Absolutely. And you know, if I could just go back to kind of elaborate a little bit on what you mentioned earlier, dividend capture, you know, these funds, if I recall, from way back when, when I used to cover these as an analyst at a different firm. They used to be 100%, dividend capture. But ever since he took over the portfolio management of these funds, you know, over ten years ago, that's not the case anymore. Can you talk a little bit about what percentage of the fund's portfolios are in the dividend capture sleeve, if you will? 

Josh Duitz: Yeah. So to be clear, they're not two separate sleeves, right? We've run this as one portfolio. I want to be clear about that. And we say the core of the fund we would look for total return is generally 95% in the fund is actually higher than that. And the dividend capture part of the fund we say is 5% is actually a bit lower than that. We don't have an exact amount. Every year is a bit different depending on the opportunities we see in dividends, especially the special dividends and large special dividends. You might be less in dividend capture, but really the core focus of this is really to invest in companies that could have a good total return. And with the dividend capture piece allows us do. And again, it's only a small piece of the fund. It allows us to collect that high yield but still have a diversified fund and invest in sectors that have the ability to grow.

Mike Taggart: Excellent. Thanks for elaborating on that. And then a two part question here to keep things fair and balanced. First, in which sectors or even countries have you been facing the strongest headwinds and do you expect that to change? And then second, where are you finding the most attractive opportunities? And do you expect that to change? 

Josh Duitz: So let's start talking about the headwinds first. But first, as you know, Mike, we've discussed before, we're not macro investors. Right. We're not looking to invest in one certain sector versus other. And really overweighted underweight. We believe in diversification across the portfolio. And I think that's extremely important because we are macro investors saying that it would be wrong not to understand the macro where we are, and invest accordingly to a degree. So we do look at the macro, but that's not a primary focus.

So I'd say, you know, kind of looking at this past year and seeing the sectors that have underperformed and includes consumer staples, consumer discretionary sectors. But if you look at the one big beautiful bill where it permanently extends a lower tax rates from the 2017 tax cuts in the job, Act removes taxes and tips and overtime and raises the standard deduction for both single and married filers. It also adds new deductions for seniors and car loan interest, while increasing the salt deduction tax. Since the IRS has not updated their withholding schedules and they don't plan on doing that till 2026, taxpayers are likely to see a larger refund early in the year, a trend that historically tends to lead to higher spending. So we think that could be a nice tailwind for the consumer going into 2026. 

So I would say that for sectors that have underperformed this year, the sectors have really outperformed this year. A lot have to do with the AI artificial intelligence ecosystem. And that doesn't only include it, it also includes utilities. Right, because utilities are the ones that are going to power the artificial infrastructure. If you look at what the bottleneck is for AI, it's really the power that utilities growth rates have gone from, you know, 5 to 7% to 6 to 8%. So we're seeing a lot of growth there. So both of IT related to that utilities and even some of the pipeline names have benefited because that infrastructure is key as well. So all of that ecosystem has really performed well this year. Will there be headwinds for that? I would say the headwinds are and certain stocks that valuations have become, in my opinion, headwinds because they've got too high.

But overall I think we're in the early innings of the artificial intelligence trade. So we're still going to be invested there. But we are going to be careful about what stocks we invest within that AI ecosystem. 

Mike Taggart: And then finally, what's your outlook? And especially, you know, not only sectors but outside the US. What's your outlook. 

Josh Duitz: So I would say overall we're positive on the global economy. We don't see us entering a recession anytime soon. Sure, there's a bubble in certain asset classes and probably overall for the market. You know, we think it'll keep chugging along. As long as there's no exogenous risks out there, you could always get in exogenous shock. As we've seen in the past even five years between Covid and the war in Ukraine and such, saying all that, we've now had three straight years of extremely strong gains, and now might be the time to be a bit more defensive.

So we actually think owning stocks that pay dividends and grow the dividends could be a good place to be going into next year. 

Mike Taggart: Well, thank you, Josh, for that in-depth update. 

Josh Duitz: Thanks, Mike, for having me. Always happy to be here. There are three convenient ways to learn more about both AOD and AGD. Visit their websites abdrnaod.com and abdrnagd.com.

Second, you can email us at InvestorRelations@Aberdeenplc.com or give us a call at 1-800-522-5465. I'm Mike Taggart of Aberdeen. Thank you for listening.

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