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 second quarter, marked by a recovery in global equity markets, was also positive for the fund. The fund rose 14.05%, outperforming the index (+11.97%) and the Frontier 100 ETF (+13.6%), measured in euro based on total return.
The impact of Covid-19 on Frontier Markets may be less severe than originally estimated by investors. The relatively young population and the lower population density leads to relatively fewer deaths than in developed countries. In addition, for example, obesity is less common and frontier countries in Asia and Africa have experience with epidemics or other types of natural disasters and as such are better prepared culturally and psychologically for extreme situations. As a result, action was taken at an early stage, for example in Vietnam. The country has conducted many tests and is the first major country (100 million inhabitants) to control the virus, with only 270 people infected and without fatalities.
The IMF (April 2020 estimate) expects a GDP contraction of 2.7% for Frontier Markets by 2020, compared to a contraction of 6.6% for Developed Markets. For next year a GDP recovery is also expected to be +5.3%; higher than the expected rebound in Emerging Markets (+5.1%) and Developed Markets (+4.5%).
Within the portfolio, the weighting in Vietnam has been increased from about 10% to more than 15% at the expense of Kuwait in the previous quarter. One of the new stocks within the fund is the real estate developer Nam Long Investment. The stock is trading at 5.9x the expected profit with a dividend yield of 4.7%. For the coming year the expectation is that earnings per share will grow by 18% and that the company will be debt-free.
The fund currently has (equally weighted) positions in 71 stocks across 24 different countries. The countries with the largest weightings are currently Vietnam (15.03%), Morocco (8.97%) and Kenya (7.59%). 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.
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.