Stock Analysis & Valuation Aberforth Split Level Income Trust PLC (ASIT.L)

• Previous Close: £83.50
• Sector Valuation Confidence Level: High

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	0.50	-99
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Aberforth Split Level Income Trust PLC (ASIT.L) is a UK-based closed-ended equity mutual fund managed by Aberforth Partners LLP, focusing on small-cap value stocks in the UK market. Launched in 2017, the fund employs a fundamental, bottom-up investment strategy to build a diversified portfolio across multiple sectors, benchmarked against the Numis Smaller Companies Index. Targeting income-seeking investors, ASIT.L emphasizes dividend yield and capital appreciation through undervalued UK small-cap equities. Operating in the Financial Services sector under Asset Management - Income, the trust provides exposure to high-potential, lesser-known companies often overlooked by larger funds. With a market cap of approximately £158.9 million, ASIT.L offers a unique value proposition in the UK investment trust landscape, combining income generation with the growth potential of small-cap equities.

Investment Summary

Aberforth Split Level Income Trust PLC presents an attractive option for investors seeking exposure to UK small-cap value stocks with an income focus. The fund's disciplined value approach and strong dividend yield (9.3p per share) are appealing in the current market environment. However, its small-cap focus introduces higher volatility (beta of 1.02) and liquidity risks compared to large-cap alternatives. The trust's zero debt position and positive net income (£16.9 million) demonstrate financial stability, while its £9.1 million operating cash flow supports dividend sustainability. Investors should weigh the potential for outperformance in recovering small-cap markets against the inherent risks of this niche segment. The fund's performance against its Numis benchmark will be crucial in assessing management's stock-picking ability.

Competitive Analysis

Aberforth Split Level Income Trust PLC occupies a specialized niche within the UK investment trust market, differentiating itself through its exclusive focus on small-cap value stocks with income characteristics. The trust's competitive advantage stems from Aberforth Partners' established expertise in UK small-cap investing, employing a rigorous bottom-up approach to identify undervalued companies with strong cash generation. This focus allows ASIT.L to access opportunities often too small for larger funds while maintaining a diversified sector approach. The split level structure provides additional flexibility in capital allocation between income and growth objectives. However, the trust faces competition from both broader UK equity income funds and more specialized small-cap vehicles. Its performance depends heavily on the UK small-cap market's recovery prospects and the manager's ability to consistently identify mispriced assets. The zero debt position enhances stability but may limit leverage opportunities during market upswings. ASIT.L's relatively small size could be both an advantage (agility in small-cap markets) and a disadvantage (higher expense ratios).

Major Competitors

• Standard Life Investments Property Income Trust Ltd (SLI.L): Focuses on UK commercial property rather than equities, offering different risk/return profile. Strong in property income but lacks ASIT.L's equity growth potential. More stable dividends but lower capital appreciation prospects.
• JPMorgan Global Emerging Markets Income Trust plc (JMG.L): Offers emerging markets exposure versus ASIT.L's UK focus. Higher growth potential but with greater volatility and currency risk. More diversified geographically but less specialized in value investing.
• Big Yellow Group PLC (BYG.L): A REIT specializing in self-storage, providing property exposure rather than equity income. More defensive characteristics but less diversified than ASIT.L's multi-sector approach.
• Henderson Smaller Companies Investment Trust plc (HSL.L): Similar UK small-cap focus but with more growth orientation versus ASIT.L's value approach. Larger scale provides cost advantages but may limit small-cap agility. Strong long-term track record in the space.
• Schroder UK Public Private Trust plc (SDV.L): Combines listed and private UK equity exposure. More growth-oriented with higher risk profile. Broader mandate includes private companies, offering different liquidity characteristics versus ASIT.L's public equity focus.