In May 2017, City of London Investment Group Plc (LON:CLIG) UCIT – The Emerging World Fund (EWF), a sub-fund of The World Markets Umbrella Fund plc – reached £104m in assets.
EWF’s May 2017 month-end factsheet, which we attach on pages 10 to 13, reveals:
* 3.07% EWF UCIT price rise in May 2017 compared to 2.66% benchmark rise;
* EWF performance beat its benchmark over 1, 3 and 6 months and 1, 3 and 5 years; since inception EWF has outperformed its benchmark by 1.15% pa, net of fees;
* EWF’s FUM has grown to $130m (i.e. £102m at current rate of £1.00 = $1.27).
CLIG will publish a trading update with detailed commentary on the 12 months to 30 June 2017 on 17 July.
Zeus view
EWF with over £100m of assets, provides a good indication of the performance of CLIG’s larger segmented and co-mingled mandates, in our opinion. On pages 2 and 3 of this research note we analyse EWF fund performance. EWF’s high risk adjusted ratios suggest it provides a high-quality return relative to its peers.
With the MXEF index above 1,000 we now remind investors that our forecasts are based on the index remaining at 960 (i.e. 4.3% below the current market level). On pages 4 and 5 of this note we remind investors of our forecasts. With emerging markets strengthening and dividend cover over historic DPS of 24p rising to 1.50x and 1.74x, an increase in the final DPS appears likely.
Valuation
In 2017 CLIG shares have risen 18.2% to 405p and paid an 8p interim DPS. While CLIG has outperformed the FT All Share by 11.3%, it has performed inline with the MXEF $ index which rose 17.5%.
The close correlation between the CLIG share price and the MXEF Index, is backed by the operational gearing which CLIG has to changes in FuM.
City of London Investment Group Plc has an excellent long-term track record, a strong balance sheet, clear business model, an attractive dividend yield, good momentum and potential for dividend upgrades. With the MXEF index at over 1,000 the CLIG share price should continue to trade at over 400p.
