Opportunity
Many investors are wary of volatility and looking for income alternatives to government bond yields. Yet, growth is still needed to protect the portfolio from the harmful effects of inflation and deliver the appreciation required to meet long-term life goals.
After five years of success with Norrep Income Growth as a Canadian Equity Balanced fund, Norrep Global Income Growth launched on May 31, 2011 to employ the same proven and repeatable methodology on a global scale. In addition to intelligent diversification into the other 95% of the world's markets, investors will receive strong and stable monthly distributions without sacrificing equity growth prospects.
Strategy
The fund is a Global Equity Balanced fund investing primarily in dividend-paying equities with a minimum 10% fixed income weight allocated to areas that are historically less sensitive to rising interest rates.
Monthly targeted distributions are $0.04/unit or 4.8% annualized. A covered call strategy adds to income generation to create the potential for a higher distribution. The portfolio is currency-hedged to ensure investors receive the true investment return.
For the fund's equities, we select holdings that generate long-term earnings and deliver cash flow growth, while offering high returns on equity. In addition, companies in the portfolio exhibit high quality management teams and strengthening competitive positions in their industries.
The portfolio managers seek out companies with growth potential that also happen to have a high dividend yield, rather than companies that pay a high yield, but enjoy limited growth prospects. By targeting equities paying out a low percentage of their earnings, the likelihood of higher dividends is increased and the risk of a dividend cut in tough times is reduced. A value overlay ensures that the fund does not overpay for yield.
The Norrep advantage
Niche expertise: With over a decade of proven outperformance in small/mid cap equity investing, our portfolio managers excel at identifying undervalued securities with significant growth potential before the market recognizes their value.
Focused and independent insight: Our investment management group has a deep roster of experienced professionals that allows the portfolio managers to objectively view an investment's merits in making informed decisions. We choose to know a lot about about niches like global income equities, rather than a little about everything.
Proven and repeatable methodology: Our portfolio management team ensures that we build portfolios which are more attractive than the market based on key value and momentum metrics that have been proven historically to result in favourable investment outcomes.
Long-term focus: We focus on each investment's long-term prospects and not necessarily the next quarter's earnings. Short-term market turbulence is often viewed as an opportunity to profit from inefficient markets by selectively adding to fund positions in our favourite investments.