Fund Manager Q&A: Somerset Emerging Markets Dividend Growth

What is the underlying strategy behind the management of the fund?

At the core, we look to invest in companies that demonstrate prospects for long-term cash flow and dividend growth. Stock selection is driven by a bottom-up, fundamental process. We screen companies for profitability, returns, debt and valuation, as we seek companies that we think will be able to generate superior returns sustainably. The dividend is in some respects one of the last things we look at, as it should be a symptom of a good company rather than a cause of one. Hence we may even invest in companies that do not pay a dividend if we expect them to pay one in future.

We prefer to hold companies for a long period and let the companies generate compounded returns, though we have also, occasionally, taken shorter-term (1-2 year) decisions. A position will be sold if the valuation becomes too onerous; if there is a maj