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
Since the start of the year the Frontier Markets Index (-3.98%) has fallen less sharply than the Emerging Markets Index (-7.8%) and the World Index (-7.05%). The fund declined by 4.82% over the same period. The lower correlation as well as the diversity in the Frontier Markets plays a role here. A positive outlier is, for example, Ghana; where the stock market gained more than 5% this year. With an economic growth of 8.1% in 2017, 6.8% in 2018 and an expected growth of 7% for 2019, Ghana is one of the fastest growing economies in the world.
The reforms that started in the West African country three years ago are now starting to be successful. These reforms were focused on reducing deficits and an aggressive revision of the banking sector, reducing the number of lenders from 69 to 23. This offers opportunities for Cal bank and Ecobank Ghana, two listed companies that the fund has in its portfolio. Cal Bank, for example, trades more than 20% below book value at a price earnings ratio of only 3.81x and a dividend yield of 4.85%. For the first 9 months of 2019, a net profit increase of 31% was reported on an annual basis.
In the past month, Bank of Georgia caught the eye with an increase of 8.95%. The bank, with operations in Belarus and Georgia, reported a pre-tax profit increase of 37% over Q4 2019. The stock trades at 4.9 times the expected profit with a dividend yield of 5%.
There was good news from Vietnam regarding the corona virus. In the country only 16 infections have been diagnosed there and these people have all been declared cured. Also, no new infections have been added in the past 15 days.
The fund currently has (equally weighted) positions in 69 stocks across 23 different countries. The countries with the largest weightings are currently Vietnam (10.28%), Morocco (9.21%) and Kenya (8.34%). 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.
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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.
