NAV on 2019/07/23
|NAV on 2019/07/22
|52 week high on 2018/09/05
|52 week low on 2019/01/04
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
Sanlam Collective Investments
MSCI World High Dividend Yield NR USD Index (M1WDHDVD Index)
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Douw joined Old Mutual Investments in 1991 as an equity analyst, where he spent the next fifteen years. During this time his responsibilities included that of head of industrial sector research and the management of a variety of equity portfolios. During his last five years with Old Mutual, Douw was responsible for the management of all of its value style mandates, including the Old Mutual Value Fund and the Old Mutual High Yield Opportunity Fund. Douw joined Orthogonal Investments as one of its founding shareholders upon its inception in 2007.
Denker SCI Global Dividend Feeder Fund - Mar 19
Global equity markets recovered strongly from the sell off at the end of last year. The S&P 500 in dollars gained 13.1%, the MSCI World gained 11.9% and the MSCI EM, lagging slightly, gained 9.6%. The most surprising development in markets was the sharp rally in long dated developed market government bonds. The yield on US 10yr maturity bonds declined from 2.69% at year end to 2.41%, while the yield on 10yr German bonds declined from 0.24% to -0.07%.
The US Congress and President Trump ended the longest government shutdown in American history on 25 January without reaching consensus over the funding amount for an expansion of the US Mexico border wall. In the UK Prime Minister May failed to gain sufficient support for her Brexit deal, but did manage to persuade European leaders to postpone the Brexit deadline until mid-April. In the last week of March the UK parliament voted on no less than eight options and has yet to find majority support for any proposal. As things stand it looks very likely that another, probably longer, delay is on the cards.
The fund participated in the recovery of the market during the quarter, closely tracking its performance. The largest contributions to this performance came from the fund’s exposure to the consumer staples, information technology and financial sectors where large moves were seen in the share prices of Philip Morris International (+34%), British American Tobacco (+33%), Micro Focus International (+51%), Cisco Systems (+26%) and Legal & General Group (+22%). A number of these shares had underperformed significantly during the past year. Other notable positive movements were seen in the prices of UK homebuilder Taylor Wimpey (+32%) and US aircraft manufacturer Boeing Company (+19%). While a number of shares lagged the substantial bounce in the market, the only notable detractor from performance was European leisure company TUI AG (-28%).
The prices of the global tobacco companies all rose markedly in response to the reporting of results during the period. These validated their previous guidance and confirmed that the industry remains extremely profitable and cash generative, despite the many challenges confronting it. Notwithstanding this slight recovery, those industry participants with exposure to the USA market continue to trade at a deep discount to the rest of the consumer staples sector and the overall market.
Micro Focus International reported full year results that were considerably better than feared subsequent to the surprise trading update issued in March 2018. In addition to confirming that the situation is nowhere near as calamitous as imagined by many analysts, the results also provided reassurance that the integration of the Hewlett Packard Enterprise software businesses acquired in 2016 remains on track to deliver the benefits originally foreseen. The recovery in the share price during the past six months has recouped almost all of the extremely painful underperformance experienced during the corresponding quarter of last year and has vindicated our decision to add to the fund’s position after the initial rout.
A week before releasing its first quarter results for the 2019 financial year, TUI surprised the market with a trading update, which warned of a significant deterioration in the profitability of its tour operator business resulting from an inability to raise prices in a weak market. This disappointment was compounded on the last day of the quarter when the company warned about the projected substantial financial impact of the grounding of its fleet of 15 Boeing 737 Max aircraft. Following the drop in the share price seen during the past six months the share is now trading at half the earnings multiple of the market and the lowest relative valuation in its history. Now is most likely not the time to panic.
The fund declared a distribution of 22.25 US cents per unit (Class A) for the six-month period to the end of March 2019. This reflects a 26% increase compared to the corresponding period of the previous year. Combined with the 29.02 US cents per unit distribution paid for the period to September 2018, it denotes a dividend yield of 4.3% (net of withholding taxes paid by the fund) on capital invested 12 months ago. This is higher than the 4.0% gross yield of the benchmark MSCI World High Dividend Yield Index at 31 March 2019.
The portfolio will invest in assets in liquid form and in participatory interests of the SIM Global Equity Income Fund under the Sanlam Universal Funds PLC approved by the Irish Regulator in September 2004. The portfolio will have foreign exposure of at least 85% at all times.