We have met the team before, and this was just a brief update reflecting recent events. They started by explaining that the most cyclical businesses and those with large levels of debt have been hardest hit, for example, banks, oils and automotive. They believe that although the macro picture is poor there is a compelling argument at company level, but it must be the right company.
Dividends have been hit hard and companies are focusing on cash preservation and therefore there have been extensive cuts in some areas. But it is not as bad as the sentiment suggests and Europe is a diverse market with lots of opportunities. They also focus on those companies which can not only pay dividends but also grow them.
The fund is split into three buckets – high dividend (50%), dividend growth (35%) and dividend upgrade (15%). They have a style agnostic approach and do not believe you have to turn to cheap high dividend payers; you can get a premium level of income from the right quality company. The current yield on the fund is 4.7%. They are active managers and will re-allocate capital when companies change their dividend policy….read more