Nov 15 - Fitch Ratings has assigned Parvest Equity High Dividend Europe, a fund managed by BNP Paribas Investment Partners (BNPP IP; ‘M2+'), a ‘Strong’ Fund Quality Rating.
Parvest Equity High Dividend Europe is a sub-fund of the Parvest Luxembourg SICAV, with EUR764m of assets at end-October 2012. Launched 12 years earlier, the fund has been managed under the current investment process since April 2010, when all high income equity portfolios were centralised under the responsibility of the ex-Fortis Investment Management’s (FIM) high dividend team through the BNPP IP/FIM integration. This team had been managing portfolios under the same investment strategy since 2003.
The fund follows a fundamental bottom-up approach to select European stocks with high, sustainable and growing dividends. It seeks to deliver gross dividend income between 3% to 5% on an annual basis, while outperforming its benchmark, the S&P High Income Equity Europe index.
Stock selection draws on a proprietary quantitative screening, selectively-used broker research, UBS financial forecasts tool and in-house fundamental research performed by the two portfolio managers/analysts. The dividend sustainability and forward-looking dimensions of future dividends are overall well-captured by these research inputs. Combined with BNPP IP’s robust support resources, they allow portfolio managers to focus their stock selection and investment decisions efforts, an important factor given the limited analytical resources faced with a wide investment universe.
Investment decisions are made by the two portfolio managers of the fund, depending on their individual conviction levels. Portfolio allocations are purely bottom-up driven. The team head and the two fund managers emphasise ongoing and regular portfolio monitoring. This is well supported by adequate portfolio management tools and risk reports run at the front-office from the Style Research application. BNPP IP’s independent risk management team provides a second level of oversight over the fund.
The fund has outperformed its benchmark since inception and over the past two years to end-October 2012 by 1.7% and 5.2%, respectively. The global fund, which has been managed under the same current high income investment process since October 2003, has delivered a gross relative performance of 3.0% and -0.8% versus its global high dividend benchmark over three and five years.
BNPP IP is the asset management arm of BNP Paribas banking group (‘A+'/Stable/‘F1+'). It had EUR502bn of assets under management or advisory at end-June 2012, including EUR85bn in equity assets.
Fitch’s Fund Quality Ratings combine Fitch’s experience in qualitative fund analysis with rankings and performance data from Lipper, a Thomson Reuters company. Fitch’s Fund Quality Ratings offer an independent, forward-looking assessment of a fund’s key performance and risk attributes and consistency of longer-term returns, relative to peer group or benchmarks. The ratings focus on the fund manager’s investment process, key fund performance drivers, risk management, and the quality of the fund’s operational infrastructure.
For more information, please see www.fitchspotlight.com/FQR.
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Link to Fitch Ratings’ Report: Parvest Equity High Dividend Europe