A boutique investment manager has launched a fund allowing investors access to companies in the Asia-Pacific region that have sustainable and growing dividend distributions with the aim of generating a long-term reliable income stream.
The Maple-Brown Abbott Asian Dividend Growth Fund is looking to generate dividend yield in excess of the MSCI All Countries Asia excluding Japan Net Index (AUD) and deliver an attractive overall return over a five-year period.
Maple-Brown Abbott head of Asia-Pacific equities Geoff Bazzan recognised the characteristics of the Asian market from which the fund is looking to benefit.
“The Asia region is home to more companies with a net cash balance sheet than anywhere else in the world and there are many companies across the region with the potential to significantly increase their returns to shareholders,” Bazzan said.
“By focusing on those companies with both the ability and intention to pay and sustain an attractive dividend profile, we believe we can offer a portfolio capable of delivering an attractive total return through the cycle with risk characteristics that are superior to that of the regional benchmark.”
According to Bazzan, the fund should not be viewed as another product offering investors a high-yield strategy.
“Our proprietary quantitative screening process means we will only consider those companies that clearly satisfy either or both of our ‘intention’ and ‘ability’ thresholds on dividend payment,” he noted.
“The focus on both the ability and intention to pay dividends is what differentiates the fund from many other high-yield strategies that are purely driven by the absolute dividend yield. Our strict scrutiny with regards to balance sheet strength and cash-flow generation will help to shield the portfolio from adverse impacts from changes in interest rates. We want to own those companies able to generate growth in dividends per share that will also support a multiple expansion.”
Maple-Brown Abbott chief executive Sophia Rahmani said the extensive experience the manager possessed with regard to Asian markets will be a major advantage of the fund.
“The Asian Dividend Growth Fund is a natural extension of the team’s deep experience in managing Asian equity portfolios. We have one of the largest Sydney-based Asian equity teams and our team developed this new strategy recognising the importance dividends play in the long-term return provided by Asian equity markets,” Rahmani noted.
The fund’s underlying assets will consist of a high-conviction portfolio comprising 20 to 40 stocks. Its investment universe includes around 4300 Asian company shares with a market capitalisation above US$1 billion.
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