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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 September the fund share price rose 2.78% whereas the benchmark index rose 2.72% over the same period, both measured in euro and based on total return. The stock selection model gives Vietnam the highest weighting at this point of time. This is in line with the positive developments of the economy. GDP grew a decent 6.41% in the first 9 months of the year compared to 5.99% in 2016. This is the strongest growth since 2012. Furthermore, exports (+19.8%) and FDI (+13.4%) were also strong.
Recently we have increased the weighting in Bangladesh and the country now ranks second in the fund’s country weighting. We have bought a new position in Jamanuba Bank that currently trades at 7.3 times earnings and a dividend yield of 8%. In Egypt we saw several decent gainers this month which contributed to the performance as Egypt takes up a weighting of 10% within the fund, compared to zero for the benchmark. One of the outliers was MM Group for Industry & International Trade. The stock rose 33.75 percent after the publication of a very positive analyst report. The IMF also had some positive notes on Egypt; the budget deficit is expected to fall to 8.5% of GPP compared to 10.5% and 12.3% in the forgoing years. Economic growth is expected to reach 4.5% this year.
Currently the fund has 84 (equally weighted) stocks in portfolio, which are spread over 23 different countries. The countries with the largest weightings are now Vietnam (14.32%), Bangladesh (10.78%) and Egypt (10.08%). 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 KCELL (+37.32%) in Kazakhstan, MM Group for Industry (+33.75%) in Egypt and Fatima Fertilizer (+19.58%) in Pakistan. The losers this month were Donaco (-12.97%) in Australia and Compagnie Miniere (-11.74%) in Morocco, 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.