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
The Frontier 100 ETF and the Frontier index fell by 1.67% and 1.19% respectively during September, but the fund moved against the market and went up by 1.96%. A shift took place in the market from relatively more expensive markets to cheaper ones. In the Frontier universe, this meant that the market in Kuwait fell by 6%, while the markets in Pakistan (+ 11.56%) and Nigeria (+ 4.83%) showed a strong recovery. For example Access Bank, one of the largest Nigerian banks and the largest position in the fund, went up by 24% last month. Still the stock trades at 3 times earnings with a dividend yield of 6.7%. Pakistan Oilfields (POL) was also among the winners with a jump of almost 13%. This share trades on the lowest valuation in 10 years with a price-earnings ratio of 5.7 with a dividend yield of 15%. In addition, the company has a cash level that is 36% of the market value.
Just like Vietnam, Bangladesh is one of the winners in the international trade war. The demand from the US for clothing had risen steadily in recent years, but now appears to be accelerating. The dollar value of exports from Bangladesh to the US increased by 14.5% in the first half of the year compared to 6.5% in the same period last year. In Egypt the exchange rate was under pressure due to demonstrations in Cairo. Thousands of people called for President Al Sisi's resignation. The EGX30 index fell by more than 12% within a few days, but has now largely recovered.
Index provider FTSE did not promote Vietnam to the status of Frontier market to Secondary Emerging Market in September. Obstacles are still the Foreign ownership limits (FOL’s) and settlement procedures. Nevertheless the Ho Chi Minh Index rose by 2.31% in the past month. Next year FTSE will look at the situation again, but index provider MSCI could also decide to promote Vietnam to Emerging Market in June 2020.
The fund currently has (equal weighted) positions in 75 shares across 23 different countries. The countries with the largest weightings are now Nigeria (12.43%), Vietnam (12.21%) and Morocco (7.72%). In these markets there are currently the most interesting high dividend shares that meet the quality requirements. This weighting is therefore mainly determined by the relative attractiveness of the market compared to the other countries. Therefore the fund can differ 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.