Deutsche launches CROCI Global Dividends fund
Deutsche Bank, through its db-X funds division, has launched an equity fund that draws on the bank’s proprietary Cash Return on Capital Invested (CROCI) research to identify stocks most likely to continue to pay dividends.
DB Platinum CROCI Global Dividends Fund applies the CROCI methodology plus additional filters to the MSCI World Index, which tracks 1,600 companies across 25 developed markets.
The result is a smaller universe of companies potentially offering sustainably above-average dividend yields. The methodology avoids those companies with the lowest cash returns, highest leverage and most extreme volatility.
“With equity markets moving sideways and global interest rates at historic lows, investors are showing a keen interest in dividends as a way of generating sustainable income,” says Alex McKenna, head of db-X funds at Deutsche Bank. “By combining the respected CROCI methodology with filtering mechanisms that favour high dividend stocks, we’re confident we can offer real value to investors.”
CROCI was developed by Deutsche Bank’s research team to overcome the traditional difficulties in comparing company data between regions, industries and individual stocks. It aims to identify stock selection opportunities hidden by traditional metrics.
The valuation takes into account money spent by companies in intangible yet influential areas, such as advertising or research and development. It also assesses potential liabilities – pension deficits, lease obligations and warranty commitments - typically excluded elsewhere. The DB Platinum CROCI Global Dividends Fund is designed to apply the methodology in such a way as to produce a dividend-focused outcome.
The methodology also ensures diversification across industries to avoid sector concentration risk, to which dividend-biased investments can be prone.
The fund joins the existing USD2bn (as of end-July) suite of db-X funds’ 10 CROCI products. These include DB Platinum IV CROCI US with USD717m in assets, the DB Platinum CROCI Asia Pacific (USD112m), the DB Platinum IV CROCI Euro (EUR112m) and DB Platinum CROCI Sectors (EUR230m).
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