SIM GLOBAL EQUITY INCOME FUND

Transcription

1 SIM GLOBAL EQUITY INCOME FUND DOUW STEENEKAMP The appointed investment manager of the SIM Global Equity Income Fund is Denker Capital, a division of Sanlam Investment Management (Pty) Ltd, an authorised financial services provider in terms of Financial Advisory and Intermediary Act, 2002, FSP 579.

2 Fund characteristics Global long only equity portfolio Primary objective - distribution of a dividend payout greater than the yield offered by the MSCI World High Dividend Yield Index Secondary objective - achievement of real growth in the investment capital over rolling three year periods Predominantly exposed to well established businesses in developed markets Market imposes a natural sell discipline 2

3 Percent Global yields are at an historic low yr US Govt Yield Moody's AAA Corp Bond Yield S&P 500 Div Yld 1m US Benchmark Bill Source: FactSet 3

4 High dividend yield strategies outperform MSCI World High Div Yield Index - Total Return MSCI World High Div Yield Index - Price MSCI World Index - Total Return MSCI World Index - Price Source: FactSet 4

5 High dividend yield strategies outperform Difference in rolling three year total returns 15% 10% 5% 0% -5% -10% Source: FactSet 5

6 High dividend yield strategies outperform Difference in rolling five year total returns 10% 8% 6% 4% 2% 0% -2% Source: FactSet 6

7 Italy Belgium France Germany Spain Ireland Japan Norway Switzerland Netherlands Denmark United Kingdom Finland World New Zealand Canada Sweden United States South Africa Australia Percent Dividends matter a lot! 9.0 Annualised real equity return Contribution from dividend yield and growth 8.0 Annualised real returns Source: Equity Premia Around The World, Elroy Dimson, Paul March & Mike Staunton,

8 High payouts lead to higher earnings growth! Source: Surprise! Higher Dividends = Higher Earnings Growth, Robert D. Arnott & Clifford S. Asness,

9 What do we look for? Attractive initial dividend yield (net of dividend taxes) Well established business Healthy balance sheet Strong historic and prospective cash flows History of dividend growth and payments Clear dividend policy Management s commitment to the dividend 9

10 What have we been able to find? Source: FactSet, Cannacord Quest Company Country Sector Dividends received (% of starting price, 10yrs) Annualised dividend growth rate (10yrs) Annualised Total Return USD (10yrs) Israel Chemicals Israel Chemicals 211% 13% 13% Amlin UK Insurance 117% 11% 16% British American Tobacco UK Tobacco 98% 12% 16% Reynolds American USA Tobacco 96% 11% 22% Vodafone UK Telecoms 88% 12% 9% Scor France Insurance 74% 18% 12% Singapore Telecomm Singapore Telecoms 71% 16% 12% AstraZenaca UK Pharmaceuticals 64% 12% 9% Unilever UK Personal care & household products 64% 5% 12% Imperial Tobacco UK Tobacco 59% 11% 13% Legal & General UK Insurance 51% 7% 12% MITIE Group UK Facilities management 45% 15% 9% 10

11 What have we been able to find? Years of consecutive dividend progression Procter & Gamble PepsiCo McDonalds Verizon Roche Mitie Singtel Sanofi Total SA Novartis Imperial Tobacco Eli Lilly GlaxoSmithKline British American Tobacco Source: FactSet, Cannacord Quest 11

12 Sep 12 Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14 Jan 15 Mar 15 May 15 Jul 15 Sep 15 Performance vs. benchmark (USD) SIM Global Equity Income Fund Composite Index USD total return since inception (annualised) 6.6% p.a. 4.3% p.a Source: Morningstar 12 12

13 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Performance vs. benchmark (ZAR) SIM Global Equity Income Fund ZAR Composite Index ZAR 26.1% p.a. 23.3% p.a. ZAR total return since inception (annualised) Source: Morningstar 13 13

14 Performance vs. global peer group SIM Equity Income Fund A USD 1/122 2/119 2/103 20/92 Source: Morningstar As at 30 September 2015 SIM Global Equity Income A EAA OE Global Equity Income MSCI World NR USD 14 14

15 Performance vs. SA peer group SIM Equity Income Feeder Fund A1 ZAR 1/37 2/35 5/28 Source: Morningstar As at 30 September 2015 SIM Global Equity Income FF A1 (ASISA) Global EQ General 14

16 Regional and sector exposure Region UK (40%) Sector Consumer Staples (28%) Health Care (18%) USA (32%) Financials (15%) Europe (23%) Asia (3%) Australasia (2%) Middle East & Africa (1%) Telecomms (8%) IT (8%) Industrials (7%) Consumer Discretionary 7%) Energy 5%) Materials (2%) 16 16

17 Fund characteristics 30 September 2015 SIM Global Equity Income Fund ROE P/NAV PE Div Yield Fund 21.0% % Index 17.1% % Fund Index 0 Source: Factset Index: MSCI World Index ROE P/NAV PE Div Yield 17

18 Largest holdings Imperial Tobacco Vodafone Unilever Reynolds American Fwd DY: 4.1% Years paid: 18 Years growth: 18 Fwd DY: 5.4% Years paid: 25 Years growth: 0 Fwd DY: 3.2% Years paid: 30+ Years growth: 30+ Fwd DY: 3.1% Years paid: 17 Years growth: 17 Micro Focus Eli Lilly & Co British American Tobacco Novartis Fwd DY: 2.8% Years paid: 10 Years growth: 1 Fwd DY: 2.4% Years paid: 30+ Years growth: 17 Fwd DY: 4.2% Years paid: 30+ Years growth: 15 Fwd DY: 3.1% Years paid: 18 Years growth: 18 Philip Morris Int. Lockheed Martin Legal & General AstraZeneca Fwd DY: 4.9% Years paid: 10 Years growth: 9 Fwd DY: 2.9% Years paid: 26 Years growth: 15 Fwd DY: 5.3% Years paid: 30+ Years growth: 7 Fwd DY: 4.5% Years paid: 22 Years growth: 2 18

19 Conclusion Dividends are a crucial component of long-term investment returns Dividend focused investment strategies outperform in the long-term Dividends can provide a growing and reliable source of income Denker Capital has the ability and experience to successfully manage dividend focused mandates Initial performance of the SIM Global Equity Income Fund has been very encouraging