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
Since the start of the year the price of the fund increased by 6.26% whereas the index rose by 18.0% over the same period, both measured in euro and based on total return. The rally in the index can mainly be explained by the strong performance of Kuwait (+32%). In the past month frontier markets remained largely insulated from the tensions regarding the trade war between the US and China. For instance in Sri Lanka, where the market index rose by more than 13%, due to the largest foreign inflow in seven years. Investors are optimistic with regards to the presidential elections which will take place at the end of December. Investor sentiment was also positive in Lithuania. The Lithuania Index increased 7.6% during the month. Within the fund, Siauliu Bankas was added to the portfolio. This Lithuanian bank's core business is providing loans to the mid and small cap sector. The stock is trading at 5.6 times earnings and a dividend yield of 5.75%.
Nigeria, on the other hand, again had a difficult month. Investors are losing patience now that after five months President Buhari has still not put together a new government. Despite this impasse, the IMF forecasts that GDP growth will accelerate to 2.1% this year from 1.9% in 2018. Furthermore Nigerian banks in portfolio like Guaranty, UBA and Zenith trade at only 3-4 times earnings which represents a discount of 35% to their 5-year historical average. For more information see also the latest article in the blog section on our website: “TCM funds not losing interest in Nigerian biggest lenders”.
The fund currently has (equal weighted) positions in 79 shares across 23 different countries. The countries with the largest weightings are currently Nigeria (11.76%), Vietnam (11.47%) and Kuwait (8.88%). With a P/ E of 9.87, the valuation of the fund as a total is considerably lower than the benchmark, which is 12.83. 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. The fund’s portfolio 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.