Abrdn (ABDN) has agreed to cut its management charge on Abrdn Asian Income (AAIF ) and invest three months of fees into the trust’s shares.

Backdated to January, the investment trust has negotiated a reduction in fees to Abrdn. It will now pay the funds group 0.75% a year of either its market capitalisation or net asset value (NAV) up to £300m, and 0.6% above that. It previously paid 0.8% of NAV up to £350m and 0.6% over that.

The board says that this lowers the company’s ongoing charge by 17% although Deutsche Numis calculates that with a market value of £386m and net assets of £337m, the overall blended fee drops to 0.64% of net assets from 0.78%.

In addition, Abrdn has committed to reinvest three months of its fees into 190,000 AAIF shares. This is part of a decision by Abrdn to invest more than £30m in the shares of its investment company range which has contracted in a series of mergers and windups this year.   

At 203p a share on the day of the announcement, this will cost Abrdn around £386,000.

Chair Ian Cadby said: ‘Amid these challenging times for the investment company industry, we find it gratifying to report a meaningful reduction in overall costs for our shareholders in the upcoming year.’ He praised the manager for ‘demonstrating its support for the company’ with the share purchases.

AAIF also increased its three-year £40m floating rate credit facility to £50m, for one year, and has the option to increase it further to £70m if it identifies a ‘suitable investment opportunity’. This replaced a £10m fixed-rate loan, which matured last week.

Managed by Yoojeong Oh, Eric Chan and Flavia Cheong, AAIF has generated a 30.3% total investment return over five years, beating the 19.8% of its benchmark, the MSCI AC Asia Pacific ex-Japan index. This also beats the 2.2% from rival Henderson Far East Income (HFEL ) but lags the 37.5% from Schroder Oriental Income (SOI ). The shares have drifted to trade 13% below NAV. This compares to the one-year average discount of 12.5%.