Aberdeen Asia-Pacific Income Fund (NYSE: FAX)—our Portfolio’s sole closed-end fund—is tightly tied to the Australian dollar and Asia-Pacific growth.

It’s been a tough road on both of those counts, but at its current level, the fund offers both good value and an impressive yield.

Opening the Door

Asian fixed-income markets have evolved in the past decade, thanks to better access, greater liquidity and improved technology. The size of the Asian local currency market has grown to more than USD8 trillion, versus USD1.54 trillion a decade ago.

Nonetheless, few funds let individuals invest in bonds issued in the Asia-Pacific region.

Enter Conservative Holding Aberdeen Asia-Pacific Income Fund, the only vehicle of its kind that lets U.S.-based investors tap into developing Asia’s debt markets, as well as Australia’s.

The fund gives you exposure to bonds from Australian, Chinese, South Korean and Singaporean governments and corporations, as well as fixed-income securities from countries such as Indonesia, India, Thailand, the Philippines and Malaysia.

Developing Asia-Pacific nations are still home to a rising share of the world’s economic growth. By 2015, their slice of global GDP will jump to 49% from 29% in 2011. And unlike many Western countries, most Asian governments have low debt.

Value and a High Yield

As of Feb. 28, 2015, the fund’s currency exposure was weighted toward the U.S. dollar, at 41.5%, with 41.9% of assets invested in U.S.-dollar-denominated bonds issued by foreign investors. Australian dollar exposure was 38.1%.

The Aussie buck has dropped more than 24.9% versus the U.S. dollar since we added Aberdeen Asia-Pacific Income Fund to the Portfolio in October 2012. That has weighed on the shares, which have posted an 18.6% loss in that time.

But Aberdeen Asia-Pacific Income’s foreign currency exposure makes it a compelling option for income investors looking for some protection from an eventual downturn in the U.S. dollar.

Meanwhile, you’ll get paid USD0.035 a share per month (USD0.42 annualized). That works out to a 7.7% yield, based on the fund’s April 15, 2015, closing price.

As of the same date, the fund’s net asset value stood at USD6.12, and it was trading at a 10.6% discount to that figure.

Asia Rising

Longer-term factors point to plenty of upside from here.

For one, Asia’s fundamentals remain robust, with rising incomes and a growing middle class. In addition, continued economic reforms reinforce the appeal of Asian fixed income for diversification within a global portfolio.

Not all Asian countries are the same: Many boast current account surpluses, thereby providing the rest of the world with capital, while their governments and central banks continue to embrace fiscal discipline and inflation-targeting monetary policy.

These are the nations you want to look to for diversity and value.

Malaysia, for example, has solid fundamentals, including credible monetary policy and a persistent current account surplus. South Korea, too, has a large, steady current account surplus. Meanwhile, Indonesia still has many emerging-market characteristics, such as a persistent current account deficit, despite its improving sovereign-credit profile.

China is the region’s wildcard, and you have to consider developments in the Middle Kingdom in the broader context of Beijing’s longer-term objective: boosting living conditions for its 1.3 billion citizens.

To that end, it’s shifting away from an export-led growth model to one built around domestic demand. Efficient growth is the mantra now, not growth at all costs.

China’s growth is indeed slowing and will continue to moderate as this transition continues.

This is actually a regionwide phenomenon, and it’s sure to keep making media noise. But the upside is that it’s helping create bargains for investors—and it will pay off with longer-term stability.

Breaking It Down

Australian government and corporate bonds account for 32.3% of Aberdeen Asia-Pacific Income Fund’s holdings.

China is the number-two market geographically, accounting for 14.4% of assets, followed by South Korea (9.6%), Indonesia (8.5%), India (6.8%) and Thailand (5.5%). Hong Kong, the Philippines, Malaysia, Singapore and Sri Lanka combined account for 13.5%.

About 35% of the fund’s holdings are sovereign issues, with corporate bonds from banks, real estate trusts, electric utilities, oil and gas companies and multinationals making up the rest.

Net assets, including USD600 million in bank borrowing, amounted to USD2.2 billion. The portfolio’s holdings represent about 54.9% sovereign and state government securities, 39.3% corporates, 5.1% supranationals, 0.3% mortgage-backed securities and 0.4% cash.

As of Feb. 28, 2015, 59.8% of the portfolio was invested in securities where either the issue or the issuer was rated A or better, or was seen to be of equivalent quality by the fund’s manager.

The portfolio’s average maturity was 7.7 years, with 25.8% of holdings maturing in less than three years, 16.5% in three to five years, 39.3% in five to 10 years, and 18.3% in more than 10 years.

The appeal of Asian fixed income—such as robust fundamentals, economic reforms and geographic diversification—is backed up by diversity within the region itself.

That’s a key takeaway: By focusing on just one, two or a handful of Asian countries, you’re robbing yourself of the benefits of that diversity.

Luckily for investors, this is where the Aberdeen Asia-Pacific Income Fund shines.

Aberdeen Asia-Pacific Income Fund, a relatively safe way to establish broad regional diversification, is a Buy up to USD9.

Dividend reinvestment and direct purchase are available through the fund’s transfer agent, Computershare. Go to https://www-us.computershare.com/aberdeen/default.aspx for more information.

Sector Spotlight: Consumer Services

Movie Magic

By David Dittman

Many people see the movie business—with a seemingly glamorous history stretching 
back to Hollywood’s Golden Age in the ’30s and ’40s—as recession-resistant.

But in this case, perception and reality are very different.

It’s true that a trip to the cinema makes for a comparatively cheap night out when times are tough, but box-office success still rides on something largely beyond a theater operator’s control: the quality of the films themselves.

The good news is that Hollywood has gotten better at turning out dependable hits in recent years, mainly by relying on sequels, prequels, spinoffs and reboots featuring popular characters and storylines.

But making movies work as an investment these days is a matter of smoothing out box office revenue that can be as volatile as any Hollywood diva or director.

Luckily, Aggressive Portfolio Holding Amalgamated Holdings Ltd. (ASX: AHD) has found the secret. And in so doing, it’s established a solid track record of payout growth, with 19 dividend hikes since 2001.

A Brighter Picture

Amalgamated is the number-one theater company in Australia and New Zealand, where it mainly operates under the Event and BCC brands. It’s also the dominant player in Germany, where it’s known as CineStar.

In all, the company has 1,000 screens across all three countries, making it the world’s 11th-largest cinema group. It also generates solid revenue from on-screen advertising and merchandise sales in its theaters.

But the box office is the lifeblood of the business, and here, Amalgamated has upped its game by retooling its projection rooms with some of the world’s best technology, including 3-D, digital and IMAX projection. That lets it command premium ticket prices.

A night at the movies remains a staple of life Down Under: According to the latest data from the Australian Bureau of Statistics, 11.7 million Australians, or 67% of those 15 and older, had been to a cinema in the preceding 12 months. Of that total, 90% caught a film more than once, and 53% hit the local theater five times or more.

And although overall cinema attendance is slowly but steadily declining, Germany remains a solid market worth more than EUR1 billion a year.

Intriguing Subplots

Amalgamated has complemented its movie business with a mix of operations that include hotels and even a ski resort: Thredbo, located in the Snowy Mountains of New South Wales. Its hotel brands include Rydges, QT and the recently introduced Atura value banner.

Thredbo and the hotel businesses took center stage in the company’s fiscal 2015 first half (which ended December 31, 2014), helping offset mediocre box office results at the cinema division.

During the period, Amalgamated’s adjusted underlying profit rose 21.8% from a year ago, while net profit after tax gained 10.7%, reflecting an outstanding ski season and ongoing growth in the hotels segment.

Thredbo saw 15.1% more skiers, as cost controls helped drive earnings up by 85.4%.

Hotels & Resorts posted earnings growth of 24.2% as occupancy increased by 2.4 percentage points and the average room rate was up 2.3%.

Management reported strong demand across its hotels, which gained market share in the corporate and government segments, helping offset higher price competition in the domestic leisure market.

As for the cinema business, the Australian circuit was hurt by a generally soft film slate in the first quarter of the fiscal year, though the lineup strengthened as of October and helped drive a partial recovery.

Merchandising revenue per customer was up in Australia, New Zealand and Germany. That, combined with effective cost controls, partially offset the weaker box office.

The strong results prompted the company to hike its interim dividend by 6.7%, to AUD0.16 a share.

Over the next two years, Amalgamated will add 85 screens in Australia, while continuing to upgrade its existing ones.

The company’s hotel portfolio continues to expand, too: In September 2015, it will open the QT Residence at Bondi Beach, while the QT Melbourne, a former cinema site, and the QT Queenstown, a conversion of a preexisting hotel, will open in 2016.

Amalgamated is also redeveloping a former cinema into a mixed-use property that’s on track for a mid-2015 completion, as well as a new corporate office that will include retail space in the heart of Sydney’s George Street.

Formulaic—in a Good Way

A strong 2015 film lineup promises much better ticket sales during the second half and into fiscal 2016.

Franchise movies released in calendar 2014 had predecessor sales of USD4.12 billion, down slightly from a record USD4.17 billion in 2013.

But in 2015, that figure jumps to USD4.55 billion as reliable hits abound for the rest of the year and beyond. Furious 7, the latest entry in the Fast and the Furious franchise, is already attracting big audiences.

The latest stories from Marvel, including Avengers: Age of Ultron and the follow-up to the surprise hit Pitch Perfect, support what could be a record-breaking summer.

Looking further ahead, a Star Wars reboot, another James Bond thriller (which may include the reintroduction of the nefarious Ernst Stavro Blofeld) and The Hunger Games: Mockingjay Part 2 will drive ticket sales during the holiday season.

That should set the stage for a strong fiscal 2016 for Amalgamated’s cinema business—and even more dividend growth.

Amalgamated Holdings is a Buy under USD10.