View from the Road – December 2017

December can be a useful time of year for fund managers to tear ourselves away from our screens, hit the road and spend some time with investors. David Keir and Graham Campbell, Co-Managers of the TB Saracen Global Income & Growth Fund, discuss client perspectives on life and the markets…

View from the road – December 2017

December can be a useful time of year for fund managers to tear ourselves away from our screens, hit the road and spend some time with investors.  It is always insightful to hear how our clients view life and markets; and some interesting perspectives came out.

  1. A number of clients asked about the dividend yield on the TB Saracen Global Income & Growth Fund and our allocation of charges to Capital and Income.
  2. Investors are getting increasingly nervous about the valuations in “bond proxies” and US growth stocks. Several clients questioned whether it is time to buy “value”?
  3. Retail investors are now asking about how to invest in Bitcoin.
  4. How will receipt of the TB Saracen Global Income & Growth Fund mailing list be affected by MIFID II? We have still yet to find a person that thinks MiFID II is a good idea!


  1. Dividend yield on the fund and charging structure

We have received feedback from a number of clients regarding the dividend yield on TB SGIG and our charging structure.

Whilst the forecast gross running yield on the fund for the next 12 months is 3.7%, the historic dividend yield is only 2.6%.  The difference between the historic and forecast yield is clearly the timing of receipt of dividends from companies and paying them out to investors and our annual management charge (‘AMC’).

Obviously, the lower yield is clearly a reflection on the fact that equity markets have done so well in recent years!

When we launched the fund, we decided to split the AMC 50% against income and 50% against capital, given that we were targeting growth in income and growth in capital over the long-term.

Our understanding is that we are the only fund in the Global Equity Income sector to do this as everyone else charges the AMC 100% against capital, to enable the payment of a higher dividend on the Income class of units.

The 2.6% historic yield is low for some of our income holders and they have asked us to change the charging structure to 100% against capital.

We have taken this feedback on board and decided to make the change which we expect take place in Q1 2018.

The change will boost income by between 40-50bps per annum which will bring the historic yield above 3%.

This will not have any impact on the way that we run the fund.

  1. Investors becoming wary of valuation in certain parts of the market

We got the sense investors are increasing nervous about holding onto their growth names (think US FANG stocks) given the absolute valuations compared to the value on offer in other parts of the market.

In addition, investors remain holders of the so-called bond proxies (through direct equities and in bond type equity funds) despite the valuation and limited growth on offer.  However, we sensed that clients are keen to switch into other parts of the market but to date haven’t had the confidence to do so.  We believe that sustained economic growth will encourage investors to make that switch.  Remember – consumers don’t buy more toothpaste when economies improve!

Maybe 2018 will be a better year for value…

  1. Bitcoin

We must be getting near the top in Bitcoin: the cryptocurrency, which started the year at around $1,000, and is now trading above $14,000.

Several clients mentioned that retail investors have been contacting them asking how they can invest in it.

However, we would remind our readers that Bitcoin is unregulated and not backed by any central bank.

  1. Regulation

With the deadline of 3 January 2018 fast approaching, most of our clients are incredibly busy preparing for the introduction of Mifid II.  In response to a couple of enquiries, we can confirm that   the receipt of our factsheets/quarterlies and blogs through SGIG mailing list is unaffected by MIFID II.


Many thanks for your continued support and we wish you all a very Merry Christmas and best wishes for a successful 2018!


David Keir (

Graham Campbell (

Co-Managers, TB Saracen Global Income & Growth Fund


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