The BGF Emerging Markets Equity Income Fund, which fits within the group’s Luxembourg Sicav range, will sit alongside the existing BGF Asia Pacific Equity Income, European Equity Income, Global Equity Income and World Resources Equity Income products.
The new fund is managed by Dhiren Shah, co-head of the London-based global emerging markets team, who will seek to generate a minimum yield of 30% above the index yield of its benchmark, MSCI Emerging Markets.
Typically the fund will also aim be less volatile than the index, while still being able to beat it over a market cycle. The team will invest in between 50 and 80 companies which are paying above average dividends and have sustainable franchises which are expected to grow over time. The typical beta range will be between 0.7 and 0.9.
Shah said: “I believe that dividend investing in emerging markets represents a compelling opportunity. We continue to see stronger economic growth in emerging markets than in developed markets as developing countries benefit from lower levels of sovereign debt, better demographics with expanding workforces and growth in consumer demand.
“Valuations are currently below those of most developed markets equities while corporate earnings and dividend growth is stronger. It is also notable that a portfolio of income stocks with dividend yields of 2% or more would have outperformed the wider emerging market equity indices in nine of the last 10 years.”
