ING Investment Management (ING IM) has launched a Luxembourg-based fund providing an opportunity to invest in high quality, dividend paying stocks in emerging markets
Managed by Manu Vandenbulck, the ING Emerging Market High Dividend Fund employs an actively-managed high dividend approach, which aims to offer a dividend yield that is at least 1% higher than the MSCI Emerging Markets index.
Commenting on the launch, Vandenbulck said: “The case for investing in emerging market high dividend stocks has never been stronger. The exponential growth of emerging markets over the past decade shows no sign of stopping. According to the World Bank, the eight largest emerging markets now contribute more to global growth than the European Union, Japan and the US combined. Domestic demand is becoming relatively more important than traditional export growth drivers.
Furthermore, emerging market equities show almost double the earnings growth of developed markets but with lower valuations. Greater sales growth, stronger balance sheets and cheaper valuations underpin potential for outperformance while higher dividend growth rates in emerging markets in the last decade are evidence of improving alignment with shareholders. The average dividend yield of 3.1% for emerging markets already compares favourable with 2.2% for US stocks and 2.4% for Japanese stocks. Low levels of net debt and strong margins also support our confidence in dividend sustainability and growth.”
By implementing a strict and consistent investment discipline and focusing on high quality stocks with a sustainable expected dividend yield, the fund seeks to avoid the pitfalls of passively investing in the highest yielding stocks such as dividend traps, where yields get elevated when fundamentals weaken and dividend uncertainty increases, or when unconstrained dividend strategies can introduce significant sector bias.
The latest launch follows on from the successful launch of the USD 385m closed-end ING Emerging Markets High Dividend Equity fund in the US earlier this year.
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