The Nigeria Stock Exchange All Share Index has dropped 10% this year, compared with a 15% gain in an index of frontier markets. Foreign investors are frustrated over a lack of policy progress since Pr... Read more
TCM Global Frontier High Dividend Equity invests in stocks listed on the local exchanges of the Frontier Markets Universe. To set up the portfolio the fund will make a selection of countries on the basis of quantitative and qualitative screening. By using these selection criteria the fund will have a diversified portfolio invested in several countries and sectors. The equally weighted portfolio will be re-weighted and re-allocated on a periodically scale. The risk profile is high, due to investment in equities and Frontier Markets. In principle, the fund will pay out dividend twice a year with an expected dividend yield of approximately 5-6% per annum. The benchmark of the fund is the Frontier Market Index (Total Return).
TCM Global Frontier High Dividend Equity is a subsidiary fund of Intereffekt Investment Funds N.V. (IIF), established with a so-called umbrella structure.
TCM has entered into an agreement with Sustainalytics for the screening of the portfolios of the TCM equity funds on ESG criteria (UN Global Compact and Controversial Weapons).
Five years ago the TCM Global Frontier High Dividend fund was introduced. During this period the fund went up by 65.93% total return. For comparison, the Frontier 100 tracker rose by 58.34% over this period. The fund started with euro 6.1 million Assets under Management in November 2012. In the meantime the fund has grown to euro 31.9 due to inflow of new capital and price rises. Since the start the fund has achieved a positive return each year, except in 2015 when the fund fell by 2.31%. The highest annual return (30.13%) has been achieved in 2014 so far. From the start of the fund euro 5.3 million euro has been paid out to shareholders as dividend. In 2015 the fund won the prestigious international Investors Choice Award.
The applied dividend strategy was characterized as defensive over the past years. The maximum drawdown (3-year monthly basis) of the fund is the lowest in the peer group. This means that the fund drops the least in periods of decline. On November 6, the fund went ex-dividend. 32 eurocents was paid per share. It was the ninth time that the fund paid out a dividend. Since this year investors have the choice to have the dividend reinvested automatically. Investors have to make this choice by 22 November 2017 at the latest and this has to be reported to their broker.
Despite the fact that this year's fund return is positive (+ 1.97% based on total return), 2017 is a difficult investment year to beat the benchmark index. This is mainly due to the rally in Argentina, where the index has increased by more than 50% (in euro). The country has a weighting of 20% in the benchmark. The fund has no position in Argentina because there are no dividend shares that meet our selection method. With regard to our structured method of stock selection, we are confident about the future. It is this selection method that has set the above-mentioned track record over the past 5 years, with an outperformance for both the Global fund (compared to the Frontier 100 tracker) and the Vietnam and the Africa fund.
The Global fund currently holds (equally weighted) positions in 84 stocks spread across 24 different countries. The countries with the largest weightings are now Vietnam (14.19%), Bangladesh (10.74%) and Egypt (9.07%). In these markets we currently find the most interesting high dividend stocks, which meet our quality requirements. The country weightings are thus mainly determined by the relative attractiveness of the market as a whole relative to other countries. Consequently, the fund differs significantly from the benchmark index (active share of approximately 85%). The price/earnings ratio at fund level is currently 9.3 with a dividend yield of 6.31%. For the benchmark index these figures are 15.0 (P/E) and 3.2% (dividend yield) respectively.
No rights may be derived from this publication. You are referred to the prospectus and Key Investor Information Document for the fund's terms and conditions. These documents may be obtained from the website or the address mentioned below. The manager of IIF has obtained a licence for this fund from the Netherlands Authority for the Financial Markets in accordance with the provisions of the Financial Supervision.