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TB Guinness Global Equity Income Fund

Overview

The TB Guinness Global Equity Income strategy is designed to provide income and capital growth by investing in companies that can pay sustainable, growing dividends

Amid persistently low interest rates, dividend-paying equities offer an attractive combination of liquidity and yield. While the potential for income is important for many investors, the case for global equity income goes much further.

Thanks to the power of compounding, re-invested dividends make a gradual but potent contribution to long-term returns. Historic equity market returns show that over long timeframes this rises to significantly over 50 per cent. In periods of low growth this can be even more striking. The 1940s and 1970s, for example, were periods defined by some combination of sluggish economic growth, rising inflation, and high unemployment. During these decades dividends accounted for over 75 per cent of the total returns of the S&P500.

The effect of dividends is apparent when comparing historic long-term returns of stocks which pay dividends with those that have not. Not only have dividend-payers outperformed on average, but dividend-growers and initiators have outperformed further still.

In addition to the compounding effect, part of the reason for this lies in the nature of dividend-paying companies. First, a history of paying a dividend – which unlike many accounting figures is a ‘hard’ cash payment – can indicate past value creation by a company. Moreover, a long history of paying dividends can instil capital discipline in company management. A commitment to a dividend leaves no room for vanity projects or frivolous uses of shareholders’ capital. A focused management team that uses the cash available to them efficiently is central to creating a well-run (and profitable) company that is able to grow and thrive in the future.

The array of companies around the world paying dividends has increased significantly in recent years. Investors can now find a range of dividend-paying companies giving genuine global diversification and exposure to a healthy range of industries in a portfolio.

Investment Team

High quality funds are run by high quality people.

We pride ourselves of having a collegial culture, with teams across the business successfully working together to achieve positive outcomes for our investors.
 

Dr Ian Mortimer

Dr Ian Mortimer

Portfolio Manager, Global Team

Matt Page

Matthew Page

Portfolio Manager, Global Team

William Van Der Weyden

William van der Weyden

Investment Analyst, Global Team

DREW Jack

Jack Drew

Investment Analyst, Global Team

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2023 Investor Conferences

For insights into 2023's uncertain markets and how our portfolio managers approach them, join us for a series of professional investor conferences in the South West of England.

Bringing a range of expertise, the investment team will cover Global Equities, Energy & the energy transition, how to approach Asia & EM, and developments in the tax-advantaged space.

Register today for a rewarding half-day of investment ideas and expert opinions at three congenial locations.

How to Invest

We aim to make it simple to invest in our funds. All our funds are open to direct investment via an application form. They are widely available on investment platforms and are eligible for UK investors’ ISAs and SIPPs.

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Investment Case

Our approach to investing in dividend-paying companies is to focus on companies that can sustainably grow their dividend into the future, rather than simply looking for companies with a high dividend yield. Consistent high return on capital is a good indicator of a company’s ability to pay healthy dividends and so we invest in companies that are unusually consistent in generating returns on capital above their cost of capital.

We focus on ‘bottom-up’ stock selection rather than trying to make decisions based on an expected outlook for the world economy. We like to invest in good companies that have, in the short term, fallen out of favour, but that have previously shown an ability to weather most economic environments over time. We prefer to invest over the long term. We also recognise the increased costs of trading in and out of companies unnecessarily. Typically we will hold a company for between 3 and 5 years in a portfolio of 35 companies, with equal amounts invested in each.

Why invest in the Guinness Global Equity Income Fund?

The Fund is designed to provide investors with exposure to global equities through a high conviction, low turnover portfolio of consistently profitable dividend-paying companies.

The case for a Global Equity Income Fund

How do we run the Fund?

How do we construct the portfolio?

 

Focus on consistent high return on capital

Consistent high return on capital is a good indication of a company’s ability to pay healthy dividends. The Fund invests in companies that are unusually consistent in generating returns on capital above their cost of capital.
 

Growth and income

Our approach to dividend investing is to focus on companies that can sustainably grow their dividend into the future, rather than simply looking for companies with a high dividend yield.
 

High conviction

The Fund typically invests in just 35 companies, with each company having an equal weighting. This provides a good balance between the benefits of diversification while also allowing each company to add meaningfully to performance. We don’t have a long tail of small positions and by definition we can never just ‘hug’ the benchmark index.
 

Fundamentally driven

We focus on ‘bottom-up’ stock selection rather than trying to make decisions based on an expected outlook for the world economy. We like to invest in good companies that have, in the short term, fallen out of favour, but that have previously shown an ability to weather most economic environments over time.
 

Low turnover

We prefer to invest over the long term. We also recognise the increased costs of trading in and out of companies unnecessarily. Typically we will hold a company in the portfolio for between 3 and 5 years.
 

Repeatable and independent

Ian Mortimer and Matthew Page have managed the Fund since launch. They have developed an investment process that is clear, robust, transparent, and scalable. Their approach filters out much of the noise and hype that surrounds companies to focus on the true signals that drive company valuations. By performing their own company research and analysis, using their own proprietary modelling systems, the managers try to avoid some of the behavioural biases associated with being unduly influenced by market sentiment.

The case for a global equity income fund

"Dividends make a gradual but potent contribution to long-term returns."

 

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Dividend growers have outperformed for 30 years

Efficient use of cash is paramount in creating a well-run, profitable company that will thrive. Management discipline is required to maintain dividend growth and can be a signal of a well-run company. Using the example of the US stock market, the evidence for this is clear in the returns of dividend paying and non-dividend paying companies over the last forty years. It is also informative to note that companies that cut their dividend were the worst performing group over this period –illustrating that not all dividend-paying companies are created equal.

Power of compounding

For investors, reinvesting dividends delivers a significant proportion of your total return. And in periods of low growth this can be even more striking. The 1940s and 1970s, for example, were periods defined by some combination of sluggish economic growth, rising inflation, and high unemployment. During these decades dividends accounted for over 75% of the total returns of the S&P500.
 

Dividends can protect against inflation

Looking again at the US as an example, dividends in the US stock market have grown at an average 6% per year since the 1940s, while inflation grew at 4%. Investing in dividend-paying companies can protect against inflation over long periods: the income received in dividend payments has grown in line or at a higher rate than inflation.
 

Global diversity

The array of stocks around the world paying dividends has increased significantly in the last decade. We can now invest in a basket of dividend-paying companies that gives you genuine global diversity and exposure to a healthy range of industries in your portfolio. In contrast, just six companies now account for over 40% of all dividend payments in the UK.

How do we run the Fund?

“We don’t chase yield, we want capital and dividend growth.”

Although the Fund is designed to invest in dividend-paying companies, our starting point in selecting our investment universe is to identify companies with consistently high return on capital. Specifically we look at companies that have a return on capital of greater than 10% in each of the previous ten years.

Our analysis shows that companies with persistently high return on capital are highly likely to continue to do so in the future – meaning they will continue to create shareholder value.

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Why 10% and why ten years?

10% return on capital…
10% is well above the average real cost of capital of 6%. This means companies who achieve this level are truly creating value for their shareholders.

…every year…
Consistency each year excludes highly cyclical companies or those with high but declining or volatile earnings.

…for ten years
Because business cycles tend to last less than ten years, the companies in our investible universe have shown they can weather most economic environments.

On average, only 3% of global listed companies achieve our threshold. We then exclude those less than $1 billion in size or with a debt to equity ratio greater than 1. This gives us a pool of around 400 companies from which to build our portfolio.
 

“It's a rare achievement for a company to meet our investment criteria and we think it shows a mark of genuine quality. And this is where our portfolio starts – consistent high return on capital.”

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What about yield?

Companies that earn a consistent high return on capital often distribute a proportion of cash they create in the form of a dividend. In the Fund, however, we focus on those companies that can sustainably grow their dividend into the future.

From this pool we then select candidates for extended research on the basis of value and sentiment. In depth proprietary modelling of a company’s cash flow, capital budgeting and potential for dividend growth is combined with a subjective analysis of its business model to identify candidates for inclusion in the final portfolio.

By selecting companies from a broad range of industries, countries, and market capitalisation we aim to create a well-diversified portfolio which can provide a reasonable dividend yield and growing income stream at an attractive valuation relative to the broad market.

    Sell discipline

    It is often easier to find companies to buy that look cheap than it is to identify those companies you own which should be sold. We consider sell discipline as important as selecting companies for purchase and continuously monitor the companies we hold in the Fund. The six core reasons we may sell a company are outlined below.

    1. The company fails to continue to meet our return on capital criteria
    2. The valuation becomes too rich
    3. The balance sheet becomes stretched
    4. The dividend outlook or management policy to dividends changes unfavourably
    5. The original investment thesis no longer holds
    6. Yield contribution to the portfolio is insufficient

     

    How do we construct the portfolio

    The Guinness Global Equity Income Fund is a concentrated portfolio of around 35 equally weighted stocks. This provides a number of useful attributes:
     

    Reduced Risk

    It reduces stock-specific risk, as we will not be overweight in a small number of favourite companies.
     

    High Performance

    We will not have a long tail of small holdings in the portfolio, which can be a distraction and a potential drag on performance.
     

    Independent

    We are truly index independent. All companies held are weighted equally without regard to their weighting in the benchmark index leading the portfolio to have a high active weight.
     

    Discipline

    It instills a strong sell discipline as we must typically sell a position in order to make way for a new one; and we must constantly assess the companies we own in the portfolio in comparison to the rest of the universe available to us. 

    Factsheets

     

     

    Fund English French German Spanish Italian
    TB Guinness Global Equity Income Fund Download

    Updates

     

     

     

    Document
    TB Guinness Global Equity Income Fund
    September 2023
    Document
    TB Guinness Global Equity Income Fund
    July 2023
    TB Guinness Global Equity Income Fund
    April 2023
    TB Guinness Global Equity Income Fund
    October 2022
    TB Guinness Global Equity Income Fund
    July 2022
    Document
    TB Guinness Global Equity Income Fund
    September 2023
    TB Guinness Global Equity Income Fund
    August 2023
    TB Guinness Global Equity Income Fund
    July 2023
    TB Guinness Global Equity Income Fund
    June 2023
    TB Guinness Global Equity Income Fund
    May 2023
    TB Guinness Global Equity Income Fund
    April 2023
    TB Guinness Global Equity Income Fund
    March 2023
    TB Guinness Global Equity Income Fund
    November 2022
    TB Guinness Global Equity Income Fund
    October 2022
    TB Guinness Global Equity Income Fund
    August 2022
    TB Guinness Global Equity Income Fund
    July 2022
    TB Guinness Global Equity Income Fund
    June 2022

    KIIDS

     

     

    Fund Class ISIN English French German Spanish Italian Swedish Finnish
    TB Guinness Global Equity Income Fund Y ACC GBP GB00BNGFN776
    TB Guinness Global Equity Income Fund Y INC GBP GB00BNGFN669

    Documents

    Document

    TB Guinness Funds - Prospectus

    TB Guinness Funds - Reports & Accounts and Value Assessment

    TB Guinness Funds - Supplementary Information Document

    Global Equity Income Fund - Approach to Responsible Investment and ESG

    Global Equity Income Fund – Exclusion Policy

    Our Approach to Remuneration - Guinness Global Equities

    TB Guinness Investment Funds - Application Form

    TB Guinness Funds - Target Market Assessment

    Fund Facts

    For information on the Fund’s current investments, please see the latest fact sheet available on the literature tab above.

     

    Launch Date
    Fund managers (start date)
    Dr Ian Mortimer, CFA (09/11/2020)
    Matthew Page, CFA (09/11/2020)
    Benchmark
    MSCI World Index
    IA sector
    IA Global Equity Income
    Structure
    UK OEIC (UCITS)
    Domicile
    UK
    Underlying currency
    Pounds Sterling
    Pricing
    Daily, forwards
    Valuation
    1200 UK time
    Deal cut off time
    1200 UK time
    Administrator
    T. Bailey Fund Services Limited
    Custodian
    Northern Trust
    UK Reporting Fund status
    Yes
    ISA Eligible
    Yes

    Share Classes

    For full information on the share classes available for investment please refer to the Key Investor Information document.

     

    Class OCF current Max Initial Charge Min Investment ISIN SEDOL Bloomberg
    Y ACC GBP 0.79% 5.00% 1,000 GB00BNGFN776 BNGFN77 TBGEIYG LN
    Y INC GBP 0.79% 5.00% 1,000 GB00BNGFN669 BNGFN66 TBGUIYI LN

    Share Prices

    The Funds are priced every working day at 12.00 UK time and updated here the following day.

     

    Fund name Isin Fund price (+/-) Date
    TB GUINNESS ASIAN EQUITY INCOME FUND Y INCOME GBP GB00BMFKG774 89.87 0.26 29/09/2023
    TB GUINNESS ASIAN EQUITY INCOME FUND Y ACCUMULATION GBP GB00BMFKG667 99.23 0.3 29/09/2023
    TB GUINNESS EUROPEAN EQUITY INCOME FUND Y INCOME GBP GB00BP5J6N11 105.21 1.92 29/09/2023
    TB GUINNESS EUROPEAN EQUITY INCOME FUND Y ACCUMULATION GBP GB00BP5J6M04 108.03 1.97 29/09/2023
    TB GUINNESS EUROPEAN EQUITY INCOME FUND Z INCOME GBP GB00BP5J6Q42 105.56 1.92 29/09/2023
    TB GUINNESS EUROPEAN EQUITY INCOME FUND Z ACCUMULATION GBP GB00BP5J6P35 108.47 1.98 29/09/2023
    TB GUINNESS GLOBAL EQUITY INCOME FUND Y INCOME GBP GB00BNGFN669 130.82 0.77 29/09/2023
    TB GUINNESS GLOBAL EQUITY INCOME FUND Y ACCUMULATION GBP GB00BNGFN776 139.76 0.81 29/09/2023
    TB GUINNESS GLOBAL INNOVATORS FUND Y ACCUMULATION GBP GB00BP5J5Y50 120.78 1.01 29/09/2023
    TB GUINNESS SUSTAINABLE ENERGY FUND Y ACCUMULATION GBP GB00BP5J6198 89.96 0.87 29/09/2023
    TB GUINNESS SUSTAINABLE ENERGY FUND Z ACCUMULATION GBP GB00BP5J6206 90.1 0.87 29/09/2023
    TB GUINNESS SUSTAINABLE GLOBAL EQUITY FUND Y ACCUMULATION GBP GB00BP5J7C70 101.91 1.39 29/09/2023
    TB GUINNESS SUSTAINABLE GLOBAL EQUITY FUND Z ACCUMULATION GBP GB00BP5J7D87 102.27 1.39 29/09/2023
    TB GUINNESS UK EQUITY INCOME FUND O OVERSEAS INCOME GB00BYX94G55 69.26 1.21 29/09/2023
    TB GUINNESS UK EQUITY INCOME FUND O OVERSEAS ACCUMULATION GB00BYX94F49 89.18 1.54 29/09/2023
    TB GUINNESS UK EQUITY INCOME FUND Y CLEAN INCOME GB00BYX94J86 74.66 1.3 29/09/2023
    TB GUINNESS UK EQUITY INCOME FUND Y CLEAN ACCUMULATION GB00BYX94H62 95.58 1.67 29/09/2023
    TB GUINNESS UK EQUITY INCOME FUND Z EARLY INVESTOR INCOME GB00BYX94L09 75.49 1.31 29/09/2023
    TB GUINNESS UK EQUITY INCOME FUND Z EARLY INVESTOR ACCUMULATION GB00BYX94K91 96.83 1.69 29/09/2023
    10 July 2023

    Guinness Global Equity Income - Webcast - Covering Q2 2023

    Date: Jul 10, 2023 11:00 AM [GMT+1] Matthew Page
    1 June 2023

    FT Adviser: DFMs take control as they cut exposure to global equity funds

    Guinness Global Equity Income featured in FT Adviser's Asset Allocator
    15 May 2023

    Greiff Research Institut – Guinness Global Equity Income (DE)

    28 April 2023

    Why yield is the last thing we look at

    The Guinness Global Equity Income manager tells Trustnet why he looks firstly for good companies…
    25 April 2023

    The 0.1%: The only six funds holding FE fundinfo’s strongest ratings

    Trustnet identifies the funds that have five crowns, an Alpha Manager and a place on FE Investments…
    13 April 2023

    Guinness Global Equity Income - Review of Q1 2023

    Date: Apr 13, 2023 Ian Mortimer, Matthew Page
    11 April 2023

    Guinness Global Equity Income - Webcast - Covering Q1 2023

    Date: Apr 11, 2023 11:00 AM [GMT+1] Ian Mortimer, Matthew Page
    23 March 2023

    Investors Chronicle – Top fund picks for a selection of goals

    David Baxter makes the case for diversifying your sources of equity income.
    6 March 2023

    Investment Week reveals finalists for Fund Manager of the Year Awards 2023

    Global Equity Income Fund and Global Energy Fund shortlisted for industry awards.
    Document

    TB Guinness Investment Funds - Application Form

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    Humming Along


    FUN FACT
     

    Q: Is a hummingbird faster than a cheetah?
    A: Hummingbirds are the fastest animals on earth relative to their body size. They are faster than a cheetah or even a fighter jet on this basis.
     
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    Nelly Tile

    TRUMPETING BOTH INCOME AND CAPITAL GROWTH


    FUN FACT
     

    Q: How many decibels does a trumpeting elephant produce?
    A: Elephants are highly intelligent and use many sounds for communication. The most famous is the trumpeting sound that they make when excited, distressed, or angry. They are also known to produce very loud infrasonic sounds that can travel up to 10 miles. The frequency of these rumbling sounds is below the audible range of humans, but their loudness is around 117 db.
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    Anteater

    A NOSE FOR GLOBAL EQUITY INCOME


    FUN FACT
     

    Q: How many insects can an anteater eat in a day?
    A: An anteater eats around 30,000 insects a day. To make this possible, giant anteaters can flick their long tongues in and out of their mouths up to 150 times per minute, which is more than twice a second!

    How to Invest

    We’ve tried to make investing in our Funds as simple as possible. All of our funds are available to invest directly via an application form, we also have good availability across a number of investment supermarkets whilst being eligible for ISAs & SIPPs.

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