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
In the first quarter of the year, the fund gained 5.70%, outperforming the index which rose 4.88% over the same period. The holdings in Vietnam and Pakistan contributed most to the positive result, but Kazakhstan also stood out. The fund has positions in the Kazakh fintech company Kaspi and Halyk Savings Bank. The stocks rose with 13.3% and 25.48% respectively in Q1 when measured in euro.
Kaspi recently reported excellent results with net profit growth of 43% in 2020, with this growth mainly coming from its digital payments and e-commerce. These two segments are also expected to drive future growth, with the company aiming for 50% growth in consolidated net profit by 2021, which, if achieved, would translate into a net profit of nearly one billion US dollars. This growth reflects the dominance and disruption that Kaspi has created in the Kazakh financial services and fintech space. The "Kaspi Super App" has 9.1 million active users, which is half of the Kazakh population. Based on the forecast for net profit for 2021, the stock is still trading at an attractive price / earnings ratio of 14x with a dividend yield of 4.5%.
The other holding company within the fund, Halyk Savings Bank, reported earnings per share on March 12, 19.61% better than expected. Halyk is also developing a 'super' app that offers multiple services, including Halyk Invest since November and Halyk Market since December. The company expects to grow from 2.6 to 4 million active users this year. The stock is now trading at only 5.5x the expected profit for 2021 with a dividend yield of 12.5%.
Within the fund we have taken up a new position in the Pakistani Meezan Bank. Earnings per share growth of 27.3% and 15.2% respectively are expected for the next two years. Meezan’s deposits have grown at a breath-taking rate of 17.53%/22.1% over a 5/10 year period, much more than its bigger competitors. With these growth figures, the price-earnings ratio of 7.4x can be called dirt cheap, with a dividend yield of 6.7% and a ROE of 27% being also very good.
Currently the fund has 84 (equally weighted) stocks in portfolio, which are spread over 20 different countries. The countries with the largest weightings are now Vietnam (19.5%), Pakistan (9.06%) and Morocco (8.93%).
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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.
