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
In the fourth quarter of 2020, the fund returned 9.87%, outperforming both the benchmark index (6.62%) and the FM100 ETF (6.95%). We can look back on an eventful year; during the corona crisis in March, the fund corrected by more than 25%, but the drawdown was less severe than with the FM100 ETF, which even lost more than 30%. Since then, a steady recovery has started, with a large part of the losses being recouped. In the end, the fund closed the year with a total return of -5.21%, thereby controlling the loss more than the index (-6.84%) and the FM100 ETF (-11.28%).
Within the portfolio we recently bought a number of new positions, including the fintech provider Kaspi. Profits at the Kazakh fintech provider Kaspi Bank increased by 34% in January-November compared to a year earlier. The company is therefore not affected by the corona crisis. Comparable profit growth is also expected for 2021 and 2022. The Kazakhstan company is trading at a price-earnings ratio (P/E) of 12x with an expected dividend yield of 6%.
We have also added the Turkish car manufacturer Tofas Turk Otomobil to the portfolio. The company is benefiting from the strong pick-up in car sales in Turkey, which increased by 57.6% in 2020. Earnings growth per share of 16% and 12% respectively is expected for 2021 and 2022. Despite the growth, it is a true dividend stock with a 5-year dividend growth of 20% and a dividend yield of nearly 7%. The P/E is 8.3x compared to over 14x for the Frontier Markets Index.
Currently the fund has 76 equally weighted stocks in portfolio, which are spread over 22 different countries. The countries with the largest weightings are now Vietnam (16.31%), Pakistan (9.08%) and Nigeria (8.67%). These markets currently contain the most interesting high dividend stocks that meet the quality requirements. This weighting is therefore mainly determined by the relative attractiveness of the market compared to 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.