Pacific Asset Management has launched a Pacific North of South EM Equity Income Opportunities Fund, a high yielding concentrated portfolio.
The Irish-domiciled Ucits fund will invest in 50-60 emerging market stocks across the market cap spectrum, all of which currently offer dividends higher than the yield available in their respective bond markets.
The gross forward yield on the fund is estimated to be above 8%. This is set against the weighted average 10-year bond yield available on the portfolio’s country exposure, which is 4%.
The fund will be managed by Matthew Linsey, Kamil Dimmich, and Robert Holmes.
The managers will also aim to capture a high yield from a relatively concentrated portfolio of companies, selected for their sustainable dividend characteristics and ability for growth at least in line with inflation.
Linsey and Dimmich also manage the $1 billion Pacific North of South EM All Cap Equity strategy.
Linsey, said: “Emerging market firms are, in general, seeing elevated earnings and relatively low capital expenditure, leading to high free cashflows. Unlike US firms where buy-backs are the order of the day, emerging market firms tend to distribute.
“Unlike many emerging market income funds, which are often entirely Asia-driven and benchmark orientated, we will invest in the best names in low cost of capital countries across the emerging market universe while offering a very attractive yield. Moreover, we see this in the context of real returns, and we believe this fund could be a truly attractive inflation hedge.”
UK-based Pacific Asset Management has £2.7 billion in assets under management, and is part of John Beckwith’s Pacific Investments Group, a private family office established in 1994.
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