Performance Review 2008Stuart Rhodes: "Minimal exposure to US and European banks was beneficial to the fund as many stocks in the industry suffered particularly large falls. Holdings in defensive industries which make up the bedrock of the fund, such as food producer Nestle and health care companies Johnson & Johnson, helped the fund to outperform."
Performance Review 2009
Stuart Rhodes: "The fund’s economically-sensitive stocks and the companies benefitting from growth in emerging markets contributed most to the strong performance, as did the cyclical portion of the portfolio, which the fund manager had increased early 2009 when valuations had been very attractive. The increase in investors’ risk appetite detracted somewhat from performance but the fund clearly outperformed its benchmark during 2009."
Performance Review 2010
Stuart Rhodes: "Optimism that the global recovery was becoming entrenched led to further strength in companies most exposed to an increase in economic activity. Once again stock picking was very effective and the fund outperformed its benchmark. Methanex and Teck Resources were the largest contributors to performance. Growing worries about debt levels in the eurozone led to downward pressure on stocks in the region."
Performance 2011 - Year-to-Date
Stuart Rhodes: "2011 has been characterised by extreme volatility and swings in investor sentiment. Rising inflation in Brazil has prompted higher interest rates, weighing on the fund’s stake in Banco do Brasil, while a resurgence of the debt crisis has led to weakness in some European stocks. The fund’s good showing has been driven by stock selection, with companies in the US making the largest contribution to performance so far; oil producer Marathon Oil led the way after announcing a corporate restructuring."
Performance since 2008
Stuart Rhodes: "A strategy of investing in companies globally with consistent dividend growth combined with long term growth strategies has enabled manager Stuart Rhodes to deliver top decile returns for investors in the €1,547 million* M&G Global Dividend Fund over the past three years.
The M&G Global Dividend Fund has generated a return of 32.8 per cent** and ranked top decile in its sector since launch in July 2008, outperforming the Morningstar Global Large Cap Value Equity sector average by 20.6 per cent*.
Outperformance has been consistently achieved across the volatile market conditions of the past three years."
*As at 31 July 2011
**Source: Morningstar, Inc as at 30 June.2011, bid to bid with net income reinvested, Euro Class A Shares.
Investment Process and Strategy – How does the Fund Manager invest?
Fund manager Stuart Rhodes concentrates on the fundamentals of global companies committed to the payment and growth of dividends for shareholders. His expertise in stock selection, looking beyond dividend yield, has been the primary driver of performance. Stuart selects companies that have the best dividend growth potential from three categories: ‘quality’, well-managed businesses with steady dividend growth; `assets`, asset-backed companies with good capital discipline in cyclical industries; `rapid growth` high-growth companies that can translate this growth into their dividend stream. All of these categories contributed positively to performance of the fund. The fund is well diversified by sector, geography and size, thereby lowering risk.
Over the long-term, Stuart believes consistent dividend growth can make a significant contribution to the total return (capital return and income) of a stock market investment. Furthermore, companies which have increased their dividends year after year have generally been rewarded by an above average performance of their share price.
Stuart believes it is also important not to be blinded by high yields as they can often be a sign of a company in trouble or limited growth potential; high dividend yields come about by either a rapidly increasing dividend or a collapsing share price.
Stuart‘s approach means he is not focused on macro-economics but on individual companies that pay a decent dividend today but are able to grow their dividend over time. These companies habitually demonstrate exemplary capital discipline. Careful stock selection based on this approach pays, both in share price performance and dividends.
Stuart says that capital discipline is a global phenomenon: there are many companies worldwide which have been able to demonstrate capital discipline through dividend increases year after year. In Europe, Nestle has been able to provide more than 10 years of consecutive dividend growth [Datastream, at 30 June 2011], Australia and Brazil are interesting for dividend investors due to their favourable regulatory environments.