The Guinness Atkinson Dividend Builder Fund recently completed their 2nd Quarter Webcast with Portfolio Managers Dr. Ian Mortimer and Mr. Matthew Page.
The fund seeks a concentrated portfolio of high quality companies at an attractive price that pays a moderate and growing dividend. We are not looking for the highest possible yield, but rather a sustainable dividend that can grow into the future.
Our top five performing stocks for Q2 were: Novo Nordisk, NEX Group, Deutsche Boerse, Vodacom Group, and Danone. Our bottom five performing stocks were: Mattel, Imperial Brands, Cisco Systems, WPP, and Procter & Gamble. Overweighting Health Care and Industrials while underweighting Energy contributed to our performance. Our largest exposures are in Industrials, Health Care, and Consumer Staples.
Changes made in the quarter consisted of buying Anta Sports and selling Total. Anta Sports is a China-based footwear and apparel manufacturer with strong CFROI and dividend growth. Total was one of the two energy companies we held in the portfolio. However, we had concerns with their falling CFROI and stagnant dividend growth.
Observing various MSCI indices, Europe and Asia are performing the strongest while the UK and US have performed the worst. The strongest performing sectors are Health Care, Industrials, and Financials; Energy and Telecom are the weakest performers. So far, Growth is significantly outperforming Value. Trailing 12-month earnings in the Global MSCI index are increasing and have grown 16% year-over-year. The strong share price performance is driven by earnings growth compared to expansion, which was the main driver in past performance also. Earnings growth is fastest in Europe, which is doubling the growth seen in Asia and the US. We think there is a divergence emerging between the US and the rest of the world and we are positioned accordingly with our underweight in the US.
We believe the companies we own have a high quality-hurdle required for purchase, yet still trade below market multiples. We still see a lot of opportunity and we are not struggling to find new ideas.
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