The Tribune Global Managed fund, run by Chris Lees, has begun to outperform its benchmark for the fi...
The Tribune Global Managed fund, run by Chris Lees, has begun to outperform its benchmark for the first time since its parent Baring Tribune Investment Trust was split into two separate pools of assets in 1998.
For the year to the end of June 2003, the fund's NAV increased by 6.5%, compared to its benchmark, a composite of 50% FTSE World ex-UK and 50% FTSE All-Share indices, which rose 6%.
Lees took over the £87.4m pool of assets from Mark Baring in April 2002 and attributes much of the rise in performance to his decision to concentrate the portfolio down from 187 stocks to 83 at the end of June this year.
He decided to concentrate the holdings because he felt the fund's over diversity was making it behave like a tracker, which Tribune already has with its second pool of assets, the Tribune UK Index fund, which tracks the FTSE All-Share.
Lees said: 'To justify a management fee, you have to take more risk and, as a result, deliver better returns to investors. I now have around 80 quoted holdings in the portfolio and around 5% is invested in unquoted companies.'
The focus of the portfolio at present is on companies that are attractively valued, which Lees believes will generate free cashflow and dividend growth.
The area of the global economy generating most dividend growth at present is the S&P 500, he said. Compared to all other global indices, which he said are producing low single-digit dividend growth, the average dividend increase in the S&P 500 was 28% over one year to 30 July.
The catalyst for this rise in dividends has been president Bush's new tax law, which has lowered the tax on dividends to 15%. Lees said this makes it more tax efficient for companies to pay a dividend from their excess cashflow rather than conduct a share buy-back.
Lees added he is finding attractively valued stocks in Asia and emerging markets, especially the technology and industrial sectors.
He has a neutral stance in the UK at present because, with the exception of Vodafone, the largest holding in the fund at 4.4%, he believes it is difficult to find companies with attractive valuations that are capable of increasing their dividends.
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