TCM Africa High Dividend Equity is a high dividend equity fund, investing in listed shares in the northern and sub-Sahara regions of Africa. Initially it will focus on Egypt, Morocco and Nigeria. In addition, it will invest in Kenya, Ghana, Botswana and Mauritius. In principle, its portfolio will have limited exposure to South Africa.
The funds investment policy will be aimed at achieving capital growth as well as dividend pay outs. In principle, the fund will pay out dividend once a year with an expected dividend yield of approximately 4% per annum.
The risk profile is high, due to investments being channelled into frontier/emerging markets in Africa. The relationship between global financial markets and African markets is low, because the latter are less sensitive to international developments.
To achieve its objective, the Fund invests 95% to 100% of its total assets through TCM Investment Funds Luxembourg in units of TCM Africa High Dividend Equity (Lux). The Fund qualifies as feeder-structure.
TCM has entered into an agreement with Sustainalytics for the screening of the portfolios of the TCM equity funds on ESG criteria (UN Global Compact and Controversial Weapons).
The Fund Manager writes
In October, the fund rose 4.1% while the benchmark index increased 3.2%. Although the markets fell in Egypt (-1.6%) and Kenya (-2.9%), the stock market in Morocco gained 5.2%. In Nigeria the market rallied + 13.4%, with United Bank for Africa (+23.8%) as the biggest winner within the portfolio.
According to the Egyptian government, as a result of a solid economic reform program, economic growth is picking up again. The PMI in Egypt rose from 50.4 in September to 51.4 in October, driven by a recovery in consumer demand and export sales. Business conditions improved despite ongoing job losses as companies adjusted to the economic challenges of the pandemic. In September, the PMI rose above 50 for the first time in 14 months. The fact that the figure is now rising above 50 for the second month in a row is positive.
Economic growth is also picking up in Nigeria. The PMI rose from 52.5 in September to 53.5 in October, mainly caused by an increase in exports. Employment rose slightly, with the pace of job creation in line with previous months. Inflation has increased by 13.7%, higher than the expectation of 13.2%. Food prices in particular have risen sharply (16.6%). The cause is attributed, mainly to the border closure directive of the federal government that was announced in August 2019. Another factor is disappointing harvests and a rapidly growing population, in which the production of food does not increase in proportion to demand.
The Moroccan private sector will benefit from two green investments totalling € 253 million, made available by the European Bank for Reconstruction and Development (EBRD), the European Union (EU), the Green Climate Fund (GCF) and South Korea. Thanks to this financial support, local businesses can acquire green technology and become more competitive, making a sustainable contribution to Morocco's economic recovery.
The fund currently holds 31 stocks in 7 different countries. The countries with the largest weightings are Egypt (32.2%), Nigeria (22.5%), and Morocco (20.3%). These markets currently contain the most interesting high dividend stocks that meet the quality requirements.
No rights may be derived from this publication. You are referred to the prospectus and Key Investor Information Document for the fund's terms and conditions. These documents may be obtained from the website or the address mentioned below. The manager of the fund has obtained a licence for this fund from the Netherlands Authority for the Financial Markets in accordance with the provisions of the Financial Supervision.