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
In the first month of the year the share price of the fund went up by 6.37%. The fund outperformed the index, which rose by 4.77%. Both measured in euro on total return. On balance there was a demand for shares in the fund. The number of outstanding shares increased this month by 83,314 to 2,298,732 units.
Within the portfolio, the positions in Bangladesh, Argentina and Thailand contributed the most to the positive result, while the positions in Nigeria and Romania impacted the share price negatively. The Bangladesh Stock Exchange Index went up by 7.9% in euro in January. Within the portfolio the holdings in Bangladesh rose on average by 18.50%, with peaks for Premier Bank (39.75%) and United Power (34.20%).
The rally in Bangladesh started after the coalition led by Hasina's Awami League party won the elections with 96% of the seats on 30 December 2018. Ms Hasina's party has provided Bangladesh with a sustained period of growth over the past ten years. The country's economy has grown by an average of 6% per annum over the past decade. At the end of the month we sold the position in United Power. Due to the sharp increase in the share price, the expected dividend yield does not comply anymore with our criteria. Instead we bought Mercantile Bank. The stock trades at 5.7 times earnings with a dividend yield of 8.7%.
Within the frontier markets universe, the stock markets of Romania and Nigeria were the worst performers in the past month. The Nigerian All Share Index for example fell by 2.36%, measured in euro. Investors are awaiting the elections scheduled for February 16. A peaceful change of power could give Nigerian shares a strong boost. In addition, the market (based on P/E) is trading at a discount of more than 25% compared to the long-term average.
The fund currently holds (equally weighted) 86 shares spread across 25 different countries. The countries with the largest weightings are Vietnam (11.69%), Bangladesh (8.92%) and Argentina (8.36%). These markets currently have the most interesting high dividend stocks that meet the quality requirements. The weighting of a country is mainly determined by the relative attractiveness of the market compared to other countries. The fund can therefore deviate strongly from the 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.