Pictet High Dividend Selection Fund

Launched in May this year, Pictet have taken advantage of commentators’ favouritism for high yielding company shares by introducing a Luxembourg domiciled, high dividend fund to the market.
The fund was originally launched to investors in Luxembourg but it has since been rolled out to a wider distribution base.

In numbers
Annual management fee: 1.2 per cent
Total Expense Ratio (TER): 1.64 per cent
Custody fees: 0.03 per cent
Administration fees: 0.27 per cent

Reviewer: Shai Patel is co-founder of financial advice firm Generation Financial Services

Shai Patel says:
While the fund name would suggest an objective of focusing on high yielding stocks, it would seem this is more a by-product of the company sectors this fund will concentrate on than an aim, with all literature specifically stating that capital growth is the objective.

Naturally, given the fund will favour companies in the water, electricity, telecommunications, energy, waste management and transportation sectors, it should generate a reasonable income yield while maintaining defensive characteristics during these uncertain economic times.

At present the fund holds over 73 per cent in cash generative utilities such as Centrica, with a further 18 per cent in telecommunication stocks like Vodafone.

The fund also currently has a bias towards European and US companies (nearly 80 per cent of the fund), although it can invest anywhere. Benchmarked against the MSCI World Utilities index, the fund is actually unconstrained and could, if deemed appropriate, move to a position of being 100 per cent in cash or liquid cash strategies.

The fund has the potential to be very interesting if the managers can time the economic cycles well, as it could move from the very defensive and Western based utility companies during the uncertain times (highlighting the mangers are probably bearish at present) to the more adventurous infrastructure companies based in emerging markets during a cycle upswing.

Timing, or course, would be crucial and given the fund was launched in May, only time will tell if they can make these calls. All in all with its marginal outperformance of the benchmark in the short time since launch and its ability to hold 100 per cent cash I give this interesting fund 3 out of 5.

3 stars