abrdn National Municipal Income Fund (VFL) Announces Major Investment Policy Change

Key Highlights for Investors

• Removal of Investment Restriction: The Board of Trustees of abrdn National Municipal Income Fund (NYSE: VFL) has approved the removal of a non-fundamental policy that previously limited the Fund’s portfolio exposure to high-yield municipal securities to 20%.
• Effective Date: The removal of this restriction will take effect on June 1, 2026.
• Expanded High-Yield Exposure: After the effective date, VFL will be able to invest in below investment grade (high-yield) municipal securities without limitation. The Fund expects to increase its allocation to these securities in stages, initially targeting approximately 30% of the portfolio, with the possibility of increasing to 30%–50% depending on market conditions.
• Board Rationale: The Board considered both the modest increase in credit risk and the potential benefits: expanded diversification, greater earnings, higher distributions, and improved long-term, risk-adjusted returns. The Board concluded that the broader investment mandate would better position VFL to serve shareholders.

Important Information for Shareholders

• Credit Risk Increase: Investors should note the Fund’s expected increase in credit exposure, which may impact the risk profile of VFL. The move into higher-yield, lower-rated municipal bonds could lead to greater volatility and risk of loss, but also offers the potential for higher returns and distributions.
• Potential Impact on Share Value: This policy change is likely to be price-sensitive. The increased exposure to high-yield securities may attract new investors seeking higher income, potentially affecting the Fund’s share price, especially as earnings and distributions could rise. However, increased risk could also lead to higher volatility and wider discounts to NAV in adverse market conditions.
• Trading Dynamics: Closed-end funds like VFL trade on stock exchanges, and share prices may fluctuate above (premium) or below (discount) net asset value (NAV). There is no assurance that the Fund will achieve its investment objectives or that share prices will remain stable. Shareholders participating in the dividend reinvestment plan should be aware that reinvestments may occur at a premium to NAV.
• Fund Management: abrdn Investments, one of the world’s largest asset managers, oversees VFL. As of December 31, 2025, abrdn managed approximately \$525 billion in assets and has extensive experience with closed-end funds since the 1980s.
• Further Information: Shareholders and potential investors can find more details about this policy change and its implications by visiting the Fund’s website (www.aberdeenvfl.com) or contacting abrdn’s U.S. Closed-End Funds Investor Relations at 1-800-522-5465 or via email at [email protected].

Summary

The removal of the high-yield municipal securities cap represents a significant shift in VFL’s investment strategy. The Board’s decision is intended to enhance diversification, earnings, and distributions for shareholders, but comes with increased credit risk. Investors should closely monitor how this change impacts the Fund’s portfolio composition and share price, as it is likely to be a key driver of future performance and could materially affect both risk and return profiles.

About abrdn Investments

abrdn Investments Global (abrdn Inc., abrdn Investments Limited, and abrdn Asia Limited) is a leading asset management firm with a global footprint and substantial expertise in closed-end fund management.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell securities. The value of closed-end funds may fluctuate, and past performance is not indicative of future results. Investors should consult their own financial advisors before making any investment decisions.

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