The dividend investment theme, currently enjoying a high profile among investors in the hunt for yield, has developed this week with the arrival of the ‘first’ dividend futures fund and, separately, as one manager reports results from an emerging market product.
Melanion Capital, based in Paris, has received authorisation from the French Autorité des Marchés Financiers to become the first alternative manager to specialise in dividend futures investment, the firm says.
Jad Comair, founder and chief investment officer of Melanion, says dividend futures have become more popular since 2008 as investors have sought to hedge their dividend exposure.
The first dividend future was listed on Eurex, a derivatives exchange owned by Deutsche Borse, in 2008 and the market has expanded since then.
Since inception in 2008, the trading strategy employed by Melanion Capital has generated an average gross return of over 20% per annum compared to a 2% average decline in the EuroStoxx50 during the same period as the impact of the global financial crisis took hold.
Meanwhile, in a separate development London-based Charlemagne Capital, an emerging markets specialist with $2 billion (€1.6 billion) under management, has seen its Magna Emerging Markets Dividend Fund reach a three-year anniversary.
The fund has delivered top-quartile performance in the IMA Global Emerging Markets sector with a 26.9% total return over three years. It has also outperformed the MSCI EM Index over the same period by 20.7% with less volatility.
At July 1 the fund had £105 million (€122 million) of assets.
The dividend yield of 5% is also significantly higher than the MSCI EM Index, Charlemagne says.
Dividend investing is concentrated mainly on the US and Europe. Funds targeting Asia and the emerging markets are less common.
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