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Press release

22Jul

Assenagon extends Asian dividend fund to include Australia: Assenagon Substanz Asien-Pazifik

A larger investment universe will enable the Assenagon Substanz Asien fund to exploit a wider range of earnings opportunities. Including Australia allows for broader diversification. Like the fund's Asian markets, Australia also offers attractive dividend yields. To highlight the extended investment universe, the fund will be renamed Assenagon Substanz Asien-Pazifik from 22 August 2016.

"By including Australia, we are adding a leading industrial nation with excellent credit standing which has strong economic ties to the Asian continent”, explained portfolio manager Daniel Jakubowski, who manages the fund with Dorian Ruffini. "The individual country weights within the fund will be reduced accordingly, offering investors even more efficient risk spreading”, added Ruffini.

Assenagon Substanz Asien was launched in March 2015. The fund invests in high dividend-yielding Asian equities to generate regular, predictable income. In addition, a systematic options strategy permanently reduces share price risk and currency risks. The fund's annual distribution target is 4.5% of the NAV, based on 30 September of the previous year. The existing target countries of Hong Kong, China, Japan, Singapore, South Korea and Taiwan will remain in the universe and offer sustainable innovative creativity, plentiful currency reserves and high market capitalisation.

Assenagon Substanz Asien's current equity universe already breaks the pattern of traditional Asian market funds, which generally focus on Asia while excluding Japan. "Japan and Australia have close economic ties with the rest of Asia”, explained Jakubowski. "That's why we see it as a logical consequence to include the two countries in our investment universe.” The current six and future seven target markets are among the world's 20 largest trading nations.

"At the same time, the region offers an equity universe which allows for a successful long-term dividend strategy”, commented Ruffini. The majority of the companies, which are regularly analysed by the portfolio managers, have substantial market capitalisation and positive earnings, and finance their dividends from profits. "These markets are also relatively favourably valued compared to Europe and the USA”, added Ruffini.

Fund strategy

The aim of the portfolio composition is to stabilise dividend income and collect continual distributions throughout the year. At least half of the stocks held should therefore have dividend payments forthcoming in the next three months. This means that the portfolio is reallocated on a quarterly basis to capture the respective dividend cycles in the target markets.

Dividend health is the most important valuation criterion in selecting the stocks, especially the continuity and sustainability of distributions. The quality of the dividend payments is determined using fundamental company data and the source of the distributed amount; the latter should be sourced from profits, not from assets. Using these criteria, the portfolio managers select 50 different equities and include them in the fund with equal weighting. To ensure diversification, limits are set for maximum portfolio weightings for countries and sectors.

However, diversification, healthy ordinary income and selecting value stocks only provide limited protection from general market turbulence. The portfolio managers therefore use dividend income both for fund distributions as well as for an options strategy to permanently reduce the fund's risk of loss by simultaneously hedging the equity nominal and currency risks on an ongoing basis.

Munich, 22 July 2016

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This information is legally a marketing communication which does not meet all legal requirements designed to guarantee the independence of financial analyses and it is not subject to any prohibition on dealing ahead of the publication of financial analyses. The past performance of the strategy is not a reliable indicator of its future performance and does not guarantee future success. All information serves solely to support your independent investment decisions and does not represent any rec­ommendation on the part of the issuing management company Assenagon Asset Management S.A. Assenagon cannot guarantee the correctness, completeness or accuracy of the information. Any liability arising from this document is therefore completely excluded. The only documents deemed binding are the prospectus and key investor information as well as the current annual and semi-annual reports, which can be requested free of charge from the management company at www.assenagon.com, or from the distribution, paying or information agents. The fund's net asset value may be subject to fluctuation. The full prospectus contains comprehensive risk information in that respect. All information is subject to change at any time without prior notice. The information was examined only for compli­ance with Luxembourg and German law. In some jurisdictions, the dissemination of such information may be subject to legal restrictions. The preceding information is thus not intended for natural or legal persons who have their residence or registered office in a jurisdiction that restricts dissemination of information of this type. Natural or legal persons who have their residence or registered office in a foreign jurisdiction should seek information on such restrictions and observe them accord­ingly. In particular, the information contained in this document is not intended for citizens of the UK (except to a person in relation to whom exemptions under the Fi­nancial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the "Order") apply. Relevant exemptions under the Order include, but are not limited to, Article 49 of the Order (high net worth companies)). The information contained in this document is also not intended for any resident of the United States or any other person deemed to be a "US person" as defined in Rule 902 of Regulation S under the US Securities Act of 1933, as amended, and this document does not purport to be an offer or sale of any interest in an Assenagon-managed fund to any such US person. No US federal or state securities commission or regulatory authority has confirmed the accuracy or determined the adequacy of this presentation or any other information provided or made available to investors. Any representation to the contrary is a criminal offense. For information on data protection, see the full prospectus.