"I've been a happy subscriber to Fullermoney for the last few years, and would appreciate your opinion on whether the Aberdeen First Australia Income Fund which as quite a few Government Bond funds is the type of fund that should be sold as per your recording this evening. Attached is the fact sheet on this fund."

David Fuller's view Thanks for the feedback and fact sheet.

I hope we are talking about the same fund because the fact sheet that you kindly forwarded is for the Aberdeen Asia-Pacific Income Investment Company Ltd, and here is the share performance over the last 10 years, for this Canadian listed closed-end investment company (FAP CN).

I have a high regard for Aberdeen but we think the yield compression in both developed and emerging country fixed interest markets, with the help of QE, has increased risks in this sector. Therefore, I would be surprised if yields went lower in the mostly emerging market holdings in their portfolio, while they rise in the USA and elsewhere over the medium to longer term. The price chart above shows that the fund has rebounded from the C$7 region on a number of occasions since 2010. While another such bounce cannot be ruled out, I am more concerned about the current premium to NAV of over 16%. That will mean revert at some point, as we see with close-end funds when they fall out of favour.