mand g global dividend citywire hk km - may 13 screen
TRANSCRIPT
M&G Global Dividend Fund
May 2013
Kotaro Miyata, Investment Specialist
2
Agenda
• Dividend investing – our philosophy
• Understanding potential headwinds
• Putting the theory into practice
3
Dividend investing – our philosophy
Source: M&G, 30 April 2013
Div
ide
nd
(p
)
The power of long-term compounding
Div
ide
nd
(c
en
ts)
0
5
10
15
20
25
30
Dividend (stock yielding 6%, no growth) Dividend (stock yielding 4%, 10% growth)
Focus on dividend growth, not yield
4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0
100
200
300
400
500
600
700
800
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
CWS Dividend McDonald's Dividend CWS Capital Return McDonald's Capital Return
Div
ide
nd
Pa
ym
en
ts (U
SD
) C
ap
ita
l re
turn
reb
ase
d t
o 1
00
(U
SD
)
Source: Datastream as at 31 December 2012
Dividend Yield
Dec 2002
California Water
Services Group (CWS)
4.7%
McDonald’s 1.5%
Dividend Payments and Capital Return since 2002, Rebased to 2002 figures
Quicker the growth, quicker the payback on your investment
Dividend investing – our philosophy Growth vs yield – an illustration
5
• Long-term dividend growth
requires disciplined growth in the
business
• Rising dividends create culture
of discipline
• Dividends shouldn’t be an
afterthought
– An integral part of good
company management
Dividend investing – our philosophy
Source: Mergent’s Dividend Achievers, 31 March 2013. US companies with a 25-year track record of consecutive dividend growth
US
dividend achievers
Capital discipline
6
Re
turn
(%
)
-0.2 %pa
1.8 %pa
8.2 %pa
11.4 %pa
-5.0
0.0
5.0
10.0
15.0
S&P500 CapitalReturn
S&P500 Total Return Dividend AchieversCapital Return
Dividend AchieversTotal Return
Dividend investing – our philosophy
Source: Mergent’s Dividend Achievers, 30 November 2012; Datastream, 31 December 2012. US companies with a 25-year track record of consecutive dividend growth
US annualised return: Capital growth vs. total return in USD (Dec 1999 – Dec 2012)
Dividends and share prices go hand in hand
Dividends and growth are not mutually exclusive
7
Agenda
• Dividend investing – our philosophy
• Understanding potential headwinds
• Putting the theory into practice
8
Understanding potential headwinds
-50
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
MSCI AC World MSCI World High Dividend Yield
Re
turn
(%
)
Source: Datastream, 31 December 2012
Annual return (USD): MSCI World High Dividend Yield Index vs MSCI AC World Index
High yield strategies have a defensive bias, in dollars
9
Understanding potential headwinds
0
5
10
15
20
25
30
35
40
MSCI AC World MSCI World High Dividend Yield
Re
turn
(%
)
Source: Datastream, Bloomberg, 31 December 2012
Annual return (USD): MSCI World High Dividend Yield Index vs MSCI AC World Index
High yield strategies struggle to keep up in rising markets, in dollars
10
Understanding potential headwinds
The importance of having a balance
Mitigating the defensive bias by picking stocks from three distinct categories
Sources of
dividends
Quality
Assets
Rapid Growth
Company characteristics
Structural growth driven by geography
or product line
Asset-backed cyclical companies
Disciplined companies with reliable
growth
Typical fund
weighting
Source: M&G, 30 April 2013
50%-60%
20%-30%
10%-20%
11
Understanding potential headwinds Combining low beta with high beta
Source: Datastream, 30 April 2012. Rebased at 18 July 2008
0
50
100
150
200
250
Ju
l 08
Se
p 0
8
No
v 0
8
Ja
n 0
9
Mar
09
May 0
9
Jul 09
Se
p 0
9
No
v 0
9
Ja
n 1
0
Ma
r 1
0
Ma
y 1
0
Ju
l 10
Se
p 1
0
No
v 1
0
Ja
n 1
1
Ma
r 1
1
Ma
y 1
1
Ju
l 11
Se
p 1
1
No
v 1
1
Ja
n 1
2
Ma
r 1
2
Ma
y 1
2
Ju
l 12
Se
p 1
2
No
v 1
2
Ja
n 1
3
Ma
r 1
3
MSCI AC World Nestle Methanex Prudential
Re
ba
se
d to
10
0
Total return (USD): July 2008 – April 2013
12
Agenda
• Dividend investing – our philosophy
• Understanding potential headwinds
• Putting the theory into practice
13
Putting the theory into practice The challenge of changing market conditions
Va
lue
ad
de
d (
%)
Attribution by source of dividends since fund launch (18.07.08)
Source: Xamin, 31 March 2013. Investment returns (gross of fees) relative to MSCI AC World Index, calculated in sterling, *Fund launched on 18 July 2008
Diversified sources of performance
-4
-2
0
2
4
6
8
10
12
2008* 2009 2010 2011 2012 2013 YTD
Quality Assets Rapid Growth
14
Putting the theory into practice
M&G Global Dividend Fund: calendar year returns (USD)
A proven track record in both rising and falling markets
-40
-30
-20
-10
0
10
20
30
40
50
MSCI AC World M&G Global Dividend Fund
Re
turn
(%
)
Source: Bloomberg, 30 April 2013. US Dollar A class shares, net income reinvested , price to price. *Fund launched on 18 July 2008
Returns (USD): M&G Global Dividend Fund vs MSCI AC World Index
A fund designed to cope with all weathers
15
Summary
• Focus on dividend growth, not yield
• Creating a balanced portfolio to outperform in different
market conditions
• Dividend investing is an excellent way to build wealth
16
Appendix
17
• Inception: July 2008
• Fund manager: Stuart Rhodes
• Fund size: $10,053 million
• Benchmark: MSCI AC World Index
• Yield objective: Yield premium to the global average
• Performance objective: Total return (income and capital growth) in excess of the MSCI AC World Index
Fund facts
© 2012 Morningstar. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of Morningstar OBSR, (2) may not be copied or redistributed, (3) do not constitute investment advice
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Likewise, the Morningstar OBSR Analyst Rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision.
An S&P Capital IQ fund grading represents an opinion only and should not be relied on when making an investment decision. Past performance is not indicative of future results. Currency exchange rates may affect the value of investments. Copyright
© 2012 by McGraw-Hill international (UK) Limited (S&P), a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.
Source: M&G, 30 April 2013. Ratings as at 31 January 2013 and should not be taken as recommendation
M&G Global Dividend Fund
18
Performance in dollars YTD
%
1 year
%
3 years
% (pa)
Since launch
(18.07.08) %
p.a.
M&G Global Dividend Fund 9.6 13.3 11.3 7.4
MSCI AC World Index 6.6 11.2 8.4 3.8
Global Large-Cap Value Equity sector 7.1 10.4 6.2 1.4
M&G Global Dividend Fund Performance in dollars
Source: M&G, Morningstar, 31 March 2013. $US A class shares (Pan European database), net income reinvested, price to price
Top quartile in sector since launch
19
An efficient and disciplined investment process M&G Global Dividend Fund
Identifying stocks we
would like to own at
some point
• Long-term dividend track
record
• Long-term growth
prospects
Investable
universe
~200 stocks
Screening
Eliminating stocks from
the global universe of
15,000 stocks
• Focus on dividend-paying
companies
• Focus on stocks with
sufficient liquidity (market
cap >$1 billion)
~4,000 stocks
Portfolio
construction
Constructing a portfolio
that can outperform in
all market conditions
• Picking stocks from three
sources of dividends
• Position size determined
by conviction
Final portfolio ~50 stocks
20
Three sources of dividends
Source: M&G, 31 March 2013
Fu
nd
we
igh
tin
g
M&G Global Dividend Fund
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Quality
Assets
Rapid growth
Sale at right price
Cash
21
Regional breakdown
Source: M&G, 31 March 2013
M&G Global Dividend Fund
Fund
%
MSCI AC World Index
%
Relative
%
US & Canada 48.4 51.2 -2.8
Europe 26.5 15.3 11.1
UK 13.6 8.0 5.6
Japan 0.0 7.8 -7.8
Asia ex Japan 5.5 9.2 -3.7
Australia/NZ 4.2 3.4 0.8
Latin America 0.7 2.7 -2.0
EMEA 0.0 2.3 -2.3
Cash 1.1 0.0 1.1
22
Fund
%*
MSCI AC World
Index %
Relative
%
Materials 13.0 6.5 6.5
Financials 23.3 21.7 1.6
Health Care 12.4 10.0 2.4
Consumer Staples 11.9 10.8 1.1
Energy 10.9 10.0 0.9
Industrials 9.0 10.2 -1.2
Utilities 2.1 3.6 -1.5
Consumer Discretionary 8.8 11.0 -2.2
Telecommunications 0.0 4.4 -4.4
Information Technology 7.6 11.8 -5.4
Cash and near cash 1.0 0.0 1.0
Sector breakdown
Source: M&G, 30 April 2013. *Preliminary data
M&G Global Dividend Fund
23
Top 10 holdings M&G Global Dividend Fund
Source: M&G, 30 April 2013 *preliminary data
Stock Fund %*
Sanofi 3.5
Microsoft 3.4
Occidental Petroleum 3.2
Methanex 3.1
BAT 3.0
Johnson & Johnson 3.0
Roche Genusscheine 3.0
Novartis 2.9
DSM 2.9
UPS 2.9
24
M&G Global Dividend Fund
• Stuart joined M&G in 2004 as a global equity analyst working closely with Aled Smith on US equities
• He was appointed manager of the M&G Global Dividend Fund upon its launch in July 2008
• Stuart graduated from Bath University with a degree in business administration. He is a CFA
charterholder
Biographies
• Simon joined Prudential Portfolio Managers in 1997 and following Prudential’s acquisition of M&G in
1999 became a fund manager specialising in UK smaller companies
• After more than 10 years investing in UK smaller companies, Simon became the dedicated analyst for
the M&G Global Dividend Fund in August 2010; he was appointed deputy fund manager in April 2011
• Simon graduated from Durham University with a BA in economics. He is a CFA charterholder
• Kotaro joined M&G in October 2006 as an investment specialist and is responsible for the M&G
Global Dividend Fund, M&G Pan European Dividend Fund and M&G European Strategic Value Fund
• He was previously a fund manager at Invesco Asset Management where he was responsible for UK
and European equities
• Kotaro graduated from Oxford University with a degree in classics and holds the Securities Institute
Diploma
Stuart Rhodes, Fund Manager
Simon Bailey, Deputy Fund Manager
Kotaro Miyata, Investment Specialist
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