Renaissance to launch GEM fund for latest hire
Renaissance Asset Managers (RAM) is to launch a Global Emerging Market Yield fund for its newest recruit, Michael Kollo.
Kollo joined the EM boutique earlier this year as head of quantitative research from Fidelity, where he was manager of the firm’s Global Dividend Yield fund.
The vehicle will be co-managed by Kollo and chief investment officer Plamen Monovski.
They will take a bottom-up approach to stockpicking, focusing on quality, yield-producing companies across emerging markets.
The managers will invest in over 100 stocks and allocations will be determined using a flat weight structure with no more than 20% in any country or sector. The fund will have an overall dividend target of 5.5%.
According to Kollo, the fund’s diversified approach has been designed in direct response to problems UK income funds have suffered from being overly exposed to one individual stock.
Equity income funds have been impacted by bad news from the largest income payers in the market, such as BP, which cancelled its dividend for three quarters in 2010 following the Deepwater Horizon oil spill.
“Earlier this year we started noticing emerging countries increasingly focus on dividend yields due to pressure from government and private individuals looking to extract money from their companies without the certainty of prices rising,” he said.
“There are many companies in emerging markets that can give you a generous (not excessive) yield of 4%-6%. So by taking a diversified approach, if one of your companies cancels its dividend, you
are only going to lose 10 basis points.”
Prior to his role at Fidelity, Kollo worked as a senior researcher in the risk and quantitative group at BlackRock alongside Monovski, who has also worked at Merrill Lynch Investment Managers.
This was first published on Investment Week.