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% per annum.
To achieve its objective, the Fund invests 95% to 100% of its total assets through TCM Investment Funds Luxembourg in units of TCM Global Frontier High Dividend Equity (Lux). The Fund qualifies as feeder-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).
The Fund Manager writes
After Frontier Markets lost more than 25% of their value in the first quarter, a recovery started in April. In this rebound the fund rose 10.79% thereby outperforming the index (7.07%) and the FM tracker (6.56%). Within the universe, we saw a particularly strong recovery in the countries of Pakistan and Vietnam where both the Karachi 100 Index and the Vietnam Ho Chi Minh Index rose more than 18%, measured in euro. On the other hand, the stock markets of Sri Lanka and Bangladesh have not yet contributed to this recovery, as markets were closed all month due to a lock down.
The situation appears to be under control in Vietnam. In the country with a population of more than 95 million people, no one has died from the virus, and most of the 270 confirmed cases have recovered since. Late last week shops and restaurants reopened after the government eased restrictions that lasted three weeks. Within the portfolio, we reduced the weighting in Kuwait in favor of Vietnam last month. For example, we have taken a new position in VEA. The company produces agricultural machinery, but also has joint ventures with Ford, Toyota and Honda for the sale of cars, engines and parts in Vietnam. On April 29, the company reported better than expected first quarter results. Net profit increased by 4.2% compared to the same period last year. The stock trades at just 7.9 times earnings with a dividend yield of over 10%. In April, the stock price rallied by 35%, but is still 15% below the level of the end of 2019.
The fund currently has (equally weighted) positions in 72 stocks across 23 different countries. The countries with the largest weightings are currently Vietnam (12.55%), Kenya (8.41%) and Morocco (8.33%). The most interesting high dividend stocks that meet the quality requirements are currently located in these markets. This weighting is therefore mainly determined by the relative attractiveness of the market compared to the other countries. The fund can therefore deviate significantly from the benchmark index.
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 the fund has obtained a licence for this fund from the Netherlands Authority for the Financial Markets in accordance with the provisions of the Financial Supervision.