Schroder ISF European Equity Yield Discover yield and growth

Transcription

1 Schroder ISF European Equity Yield Discover yield and growth * The Schroder ISF European Equity Yield (the Fund ) intends to make regular fixed distributions to investors and, if its income is insufficient to cover these payments, these payments may reduce the Fund s capital. The target 4% distribution is formally reviewed on an annual basis. The 4% distribution is a target and is not guaranteed.

2 Looking for a lower-volatility route to participating in Europe s recovery? Consider a high dividend yielding strategy. Besides providing a stable income stream, good quality stocks with high dividends tend to provide capital preservation support in weak markets, as dividends act as a buffer against capital losses. Europe is not only one of the highest-yielding equity markets globally, but also home to some of the world s finest companies. And with the recent upturn in economic activity across Europe, we believe the region is on track to recovery, ultimately paving the way for stockmarkets there to be propelled higher. The Schroder ISF European Equity Yield offers you unrivalled access to a premium portfolio of highdividend yielding European equities. Managed with the objective of capturing long-term superior returns with relatively lower market volatility, you can now benefit from a quality dividend strategy through the expertise of one of the most experienced and wellresourced fund managers.

3 Why Europe for a dividend strategy? 1. Europe offers the most attractive yields globally European companies now offer more attractive dividends than those from other regions. More importantly, dividend payouts are expected to rise going forward, given the improved fundamentals of these companies. PE ratios of major regions in top quintile of dividend yield and market median PE USA Asia Europe Top quintile Market Median Source: Factset, Societe Generale, Schroders analysis, as at 30 Sep Universe is constituents of FTSE Asia Pacific ex Japan Index, World Europe Index & United States Index. Stocks are separated into quintiles based on 12-month trailing dividend yield. PE ratio is based on trailing earnings. 2. Economic activity is picking up The region has emerged from its longest ever recession, growing 0.3% in the second quarter of 2013 after 18 months of contraction. Coupled with other positive macroeconomic data streaming out in recent months, we believe the economy is on track to recovery. This should ultimately translate to positive stockmarket performance. Trade balance as a proportion of GDP is at its highest, which means domestic demand has not been the only source of growth Trade balance as % of GDP 2.% 2.0% 1.% 1.0% 0.% 0.0% -0.% -1.0% -1.% -2.0% Current account balance Source: Thomson Datastream, Schroders, as at 27 Aug Trade balance Continued improvement in PMI composites suggests tentative signs of stabilisation in the economy Europe PMI level Jul 08 Jul 09 Jul 10 Jul 11 Jul 12 Jul 13 Composite Manufacturing Services Source: Markit, Schroders, as at 31 Jul Valuations are cheap As confidence returns to the region, equities have similarly gained momentum, and we believe there remains much scope for European equities to build on this upward momentum. European companies are very attractively valued on a number of metrics, both relative to their history and to other regions and asset classes. Valuations of European equities are attractive relative to US and Asia ex-japan equities Graham & Dodd PE Ratio May 83 May 87 May 91 May 9 May 99 May 03 May 07 May 11 MSCI Europe S&P00 MSCI Asia-Pac ex Japan Source: Schroders, UBS, as at 1 Nov 2013.

4 Why Schroder ISF European Equity Yield? 1. Attractive regular payouts The Schroder ISF European Equity Yield (the Fund ) aims to make payouts of 4% per annum. This works out to attractive regular income for investors. Intended payouts for 2014* Payout Record Date SGD Hedged Share Class EUR and USD Hedged Share Classes 29 Jan % - 26 Feb % - 26 Mar % 1% 28 Apr % - 27 May % - 2 Jun % 1% 30 Jul % - 27 Aug % - 24 Sep % 1% 29 Oct % - 26 Nov % - 17 Dec % 1% 2. Focus on growth as well as yield The Fund adopts a unique strategy, investing in companies that can grow their dividends at the same time as their earnings. This allows the Fund to seek exposure to attractive business models and superior earnings growth at the same time as a regular income stream. Fund is mainly invested in top quintile yielding stocks that deliver superior long term returns High Yielder (Q2) 34% Source: Bloomberg. Schroders analysis, as at 30 Nov 2013 European universe: European stocks over EUR 00m market capitalisation. Weights exclude cash holdings. High Yielder (Q1) 46% 20% Dividends Grower 3. Proven track record Cumulative performance of Schroder ISF European Equity Yield 1 Nov 2010 to 31 Dec 2013 Price Indexed Nov 10 TR =+4.1% AR =+12.% p.a. TR =+33.8% AR =+9.7% p.a. Dec 10 Mar 11 Apr 11 Jun 11 Aug 11 Oct 11 Dec 11 Feb 12 Apr 12 Jun 12 Aug 12 Oct 12 Dec 12 Feb 13 Apr 13 Jun 13 Aug 13 Oct 13 Dec 13 Schroder ISF European Equity Yield A Acc MSCI Europe NR EUR Source: Schroders, Morningstar, bid-to-bid, EUR, net dividends reinvested. On an offerto-bid basis, the Fund s Total Return (TR) =+37.8%, Annualised Return (AR) =+10.7% p.a. Past performance is not an indicator of future performance. The current manager Ian Kelly took over management responsibilities of the Fund on 1 Nov * The Fund intends to make regular fixed distributions to investors and, if its income is insufficient to cover these payments, these payments may reduce the Fund s capital. The target 4% distribution is formally reviewed on an annual basis. The 4% distribution is a target and is not guaranteed.

5 Where the Fund is Invested Top 10 Holdings Country Sector % Vodafone Group UK Telecommunication Services 4.8 Sanofi France Health Care 3.8 Novartis Switzerland Health Care 3.6 Eni Italy Energy 3. Total France Energy 3.4 Legal & General Group UK Financials 3.3 Reed Elsevier Netherlands Consumer Discretionary 3.2 Ageas Belgium Financials 3.1 BAE Systems UK Industrials 3.0 Statoil Norway Energy 2.8 Sector Allocation Country Allocation Telecom Services Health Care 10.2% 10.1% Consumer Energy 12.9% 8.7% Discretionary 8.1% Materials Industrials 13.4% 7.7% Consumer Staples 22.4% Utilities 4.1% Cash 2.4% Financials Germany Netherlands 10.1% Italy 11.1% 9.% France 17.0% Norway 7.4% United Kingdom Switzerland 6.% Belgium 4.8% Poland 2.4% Finland 2.1% 21.1% Denmark 1.9% Sweden 1.8% Spain 1.4% Cash 2.4% Ireland 0.6% Source: Schroders, as at 30 Nov This is not a recommendation to buy or sell the above securities.

6 Fund Details Share Class EUR A Acc EUR A Dis USD Hedged A Dis SGD Hedged A Dis Investment Objective To provide a total return primarily through investment in equity and equity related securities of European companies which offer attractive yields and sustainable dividend payments. Launch Date 7 Jan Aug Nov Dec 2013 Fund Currency EUR USD Hedged SGD Hedged Launch Price EUR 16.7 EUR 4.67 USD SGD 2.00 Minimum Subscription Amount Mode of Subscription US$1,000 or equivalent Cash only Payout Frequency Quarterly Monthly Sales Charge Up to % Management Fee Dealing Frequency 1.% p.a. Daily Bloomberg Ticker SCHEUEA:LX SCHEUEI:LX SCHEUEA:LX SCHEUEI:LX ISIN Code LU LU LU LU Fund Size EUR 6.9 million as at 30 Nov 2013 Important Notes Morningstar rating as at 31 Dec Morningstar All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. This document is prepared by Schroders for information and general circulation only and the opinions expressed are subject to change without notice. It does not constitute an offer or solicitation to deal in units of the Schroder ISF European Equity Yield (the Fund ) and does not have any regard to specific investment objectives, financial situation or particular needs of any specific person who may receive it. Investors may wish to seek advice from a financial adviser before purchasing units of the Fund. In the event that he chooses not to seek advice from a financial adviser, he should consider carefully whether the Fund in question is suitable for him. Past performance of the Fund or the manager, and any economic and market trends or forecast, are not necessarily indicative of the future or likely performance of the Fund or the manager. The value of units in the Fund, and the income accruing to the units, if any, may fall as well as rise. Investment in units of the Fund involves risks, including the possible loss of the principal amount invested. Investors should read the prospectus, available from Schroder Investment Management (Singapore) Ltd or its distributors, before deciding to subscribe for or purchase units in the Fund. The Fund may use or invest in financial derivatives. In addition, the net asset value of the Fund is likely to have high volatility due to its investment policies or portfolio management techniques. Published: January 2014 Schroders Reg. No H