Global Frontier
Fund profile
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.
Sustainability
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
The markets within our universe had a positive month in October, with Emerging and Frontier Markets adding 2.74% and 1.72% respectively, while developed markets lost 2.41%. The fund ended the month up 0.99%, rising for the third consecutive month.
The upgrade of Kuwait from Frontier to Emerging market status will start in November. Given the large weighting (37%) of the country in the FM index, this will be reduced in 5 steps to 0% until November 2021. Vietnam is likely to benefit the most from this reclassification. At this moment Vietnam weighs 12.5% in the FM index, but this will increase to 28% after the re-allocation. Vietnam currently has the largest country weighting within the fund (18.5%).
After developed markets (especially US) equities have outperformed emerging markets over a ten-year period, we are slowly seeing a shift. A combination of restrictions on share buybacks, higher interest rates, higher minimum wages, higher taxes and a weaker dollar could cause stocks outside the United States to rise faster than US stocks. Given the low valuation, emerging markets in particular seem an interesting alternative. Global consumption will double in the next ten years due to the rapidly growing middle class in Asia. The population of the top ten frontier countries within the TCM universe will have grown to 1.9 billion (20% of the world's population) by 2050, based on the United Nations projections.
Given the less developed medical facilities in emerging countries, the consequences of the Covid-19 virus for these countries were feared. However, due to the lower population density, relatively young population (median under 25 years old) and less obesity, we see far fewer deaths here than in developed countries. In addition, frontier countries often have more experience with economic shocks and other diseases, such as Ebola in Africa and Sars in Asia, resulting in a faster and more aggressive response. According to World Bank figures, the economic contraction in 2020 for the Frontier universe (-3.5%) will therefore be less than in developed countries (-7.0%), while the rebound for 2021 will be around the same for both categories (+ 3.8%).
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Disclaimer
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.
