Bestinvest says
There has been a growing trend among fund management groups in recent years to launch funds that target dividends from overseas equities as investors look further afield in the hunt for income. Whilst this fund's performance so far has been good, we would rather monitor it a bit longer before considering it for a rating. This is because the fund's manager is relatively inexperienced and therefore we would prefer to see more of a track record.
The fund aims to deliver a dividend yield above the market average, by investing mainly in a range of large and medium size global equities. The manager first applies a quantitative screen to the universe, using HOLT (a system that analyses a company's record of creating shareholder value) cash flow analysis to filter on return on capital and dividend growth to filter on income. He then undertakes qualitative analysis in conjunction with the rest of the Global Equity Team. Meeting company management is a key part of this – the team looks to ensure executives are creating value for shareholders and are committed to a progressive dividend policy.
The final portfolio comprises three types of company:
- Quality - larger, established companies paying consistent, rising dividends. These typically form about 50% of the fund;
- Companies undergoing internal changes such as restructuring (25%);
- Companies benefiting from external change (25%).
There is no minimum yield and the portfolio may include lower yielding stocks that are expected to grow their dividends.