Schafer Cullen Emerging Markets High Dividend

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Strategy

Emerging Markets High Dividend

Investment Strategy

  • 30-45 undervalued emerging market large cap stocks
  • Low P/E with growing earnings & dividends
  • High current dividend yield (target of above 4.5%)
Strategy AUM
$673m (Sep 30, 2021)
Holdings
50-70
Benchmarks
MSCI Emerging Markets
Inception Date
Jan 1, 2006

Strategy Attributes

The Emerging Markets High Dividend strategy seeks to provide unique exposure to emerging markets and long-term capital appreciation while generating strong risk adjusted returns and current income over a full market cycle.

Our disciplined value investment process assures that investments undergo rigorous fundamental research with regard to corporate governance, sustainability of cash flows, balance sheet strength, dividend attributes, profitability measures, geopolitical and macroeconomic considerations, and other factors. We invest in companies that will benefit from specific catalysts that will drive earnings growth and share price appreciation. While the emerging markets are exposed to political and currency risks, we believe our investment discipline mitigates these risks while providing exposure to the considerable upside potential of these markets.

  • The Emerging Markets High Dividend portfolio invests in undervalued, emerging equities with above average earnings growth and dividend yields (targets 4.5%+).
  • With a focus on emerging economies, this concentrated portfolio of 30-45 stocks is diversified across all sectors of the market.

Investment Process

The Schafer Cullen investment team relies heavily on fundamental research as part of its investment selection process. Because the firm has a disciplined value investment philosophy, a rigorous review of company fundamentals vs. industry peer and the overall market is an important part of the investment process.

Jim Cullen, Portfolio Manager

Screen for Value:

  • Screen universe of local shares and ADRs for:
    • Low P/E Ratios
    • High dividend yield
    • Long-term DPS growth
    • Long-term EPS growth
  • Price Momentum Trend
  • Corp. Governance Review

Fundamental Research:

  • Attractive valuations
  • Dominant company characteristics
  • Catalysts for price and EPS appreciation
  • Superior dividend policies
  • Stable macroeconomic and geopolitical environment

Portfolio Construction:

  • Approximately 45-55 holdings
  • Diversification across all 10 market sectors
  • No more than 5% in any one stock (at cost)
  • No more than 20% in any one industry (at cost)
  • Generally, no more than 30% in any one country
  • Top 10 holdings typically represent 35 – 40%
  • Continual portfolio upgrade

Sell Discipline:

  • Price objectives reached
  • Earnings growth not realized
  • Deteriorating fundamentals
  • Tax reasons
  • Changes in dividend policy
  • Overvaluation
  • Change in market thesis
  • Portfolio upgrade

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