Ruth Liew – Australian Financial Review – January 10, 2016
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Global Value Fund is expected to reveal on Monday that it will pay an interim dividend of 3 cents per share for 2015-16. Photo: Andy Wong
The $73 million Global Value Fund is boosting its dividend payment to investors for 2016 after returning 13.7 per cent for the year to December, bucking the trend of stark losses in equities markets.
The listed investment company, which is chaired by finance group Meridian International Capital director Jonathan Trollip, is expected to reveal on Monday an interim dividend of 3¢ per share for 2015-16. This takes the company’s anticipated full-year dividend to 6¢ per share, and is an increase from last year’s 2¢ per share payout.
The LIC gained nearly 14 per cent after fees last year – outperforming the 2.58 per cent losses of the S&P/ASX 200 index, and 1.4 per cent gains of the US and European markets.
“Recent market conditions have been some of the toughest to navigate for some time now, so it has been really pleasing to deliver the returns that we have,” Metage portfolio manager Miles Staude said.
“The current market turmoil is actually opening up some very interesting opportunities and we are pretty excited about the year ahead”.
The outperformance of the LIC can be attributed to its underlying fund manager’s “discount capture strategy”, which generated 11.3 per cent gross returns last year.
The dividend upgrade will come as good news to GVF’s shareholders including Wilson Asset Management’s Geoff Wilson and philanthropist Chris Cuffe, as investment markets continue their downward spiral.
China instability
Australian shares suffered their worst start of the year on record after China’s currency devaluations and sharemarket instability caused havoc among global investors.
The benchmark S&P/ASX200 fell 5.7 per cent last week, wiping off $85 billion in market value, while the broader All Ordinaries fell 5.5 per cent for the week to hit 5049.4.
GVF believes in buying discounted assets and trading below their intrinsic value, and the LIC invests globally. Some of the company’s biggest holdings include HSBC China Dragon Fund which invests in Chinese equities, Pacific Alliance China Land, and New York-listed WA/Claymore Inflation-linked Opportunity Fund.
“Given the continued strong investment performance by the manager, the board considers that it is appropriate for the company to increase its dividend payments,” GVF chairman Jonathan Trollip said.
“We understand how important fully franked dividends are for many of our shareholders, and the board is pleased to be able to announce this level of fully franked dividend income so early in the company’s history.”
Miles Staude of Staude Capital Limited in London is the Portfolio Manager at the Global Value Fund (ASX:GVF). This article is the opinion of the writer and does not consider the circumstances of any individual. Mirabella Financial Services LLP is the investment manager of the Global Value Fund and has seconded the investment team at Staude Capital to manage the Global Value Fund.