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 5-6% per annum. The benchmark of the fund is the Frontier Market Index (Total Return).
TCM Global Frontier High Dividend Equity is a subsidiary fund of Intereffekt Investment Funds N.V. (IIF), established with a so-called umbrella 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).
In August the fund share price declined 0.23% whereas the benchmark index rose 3.07% over the same period, both measured in euro and based on total return. This discrepancy can be explained by the year-to-date-rally in Argentina (+30.12%) and Kuwait (+11.81%). These countries make up 40% of the benchmark index, which is therefore rather concentrated. The fund has almost no weighting in these countries as there are hardly any stocks that comply with our (dividend) selection model. During the month the fund had a net inflow, the amount of outstanding shares rose with 38,969 to 2,384,445 shares.
The fund (dividend) stock selection differs significantly from the benchmark holdings as can be seen in the Active Share figure of 85%. Instead of hugging to an index, we are confident that steadily clipping dividends of quality companies will give the best long term results as we have seen in fund performance of the foregoing years.
Currently, the characteristics of the fund look attractive relative to competitors. The PE ratio of the portfolio (9.46x) is relative low and the dividend yield is higher (6.4%) and particular salient is that the maximum drawdown is much less than other funds in the peer group (-17.33% over the last three years).
Currently the fund has 85 (equally weighted) stocks in portfolio, which are spread over 23 different countries. The countries with the largest weightings are now Vietnam (12.64%), Bangladesh (11.01%) and Egypt (9.09%). In these markets we currently find the most interesting high dividend stocks, which meet our quality requirements. The country weightings are thus mainly determined by the relative attractiveness of the market as a whole relative to other countries. Consequently, the fund differs significantly from the benchmark index.
Among the winners this month were Telecom Egypt (+15.68%), MHP (+12.51%) in Ukraine and Southern Gas Trading (+10.98%) in Vietnam. The losers this month were Technoglass (-27.32%) in Colombia and Attock Cement (-23.82%) in Pakistan, all measured in euro and based on total return.
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 IIF has obtained a licence for this fund from the Netherlands Authority for the Financial Markets in accordance with the provisions of the Financial Supervision.