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
During the first month of the year, the share price of the fund went up by 4.54%. This resulted in an outperformance of the fund compared to the index that rose 3.17%, both measured in euro on the basis of total return. On balance there was a demand for shares of the fund; the number of outstanding shares increased by 1,338 to 811,144 units this month.
Most African exchanges started the year positively. Especially Kenya, South Africa and Egypt did well. The Nairobi All Share Index, for example, rose 8.47% in January, led by heavyweight Safaricom (+ 8.22%). The fund also has a position in East African Breweries (+ 22.78%). The Kenyan brewery reported an increase in earnings per share of 25.1% over the past six months. Besides that the interim dividend has been increased by 25%. This indicates that the management is convinced that the company can continue the higher pay-out in the future. Within the portfolio, the fund increased the position in KCB Group this month. This Kenyan bank trades at 5.4 times expected earnings with a dividend yield of 7.31%. The dividend per share of KCB grew by an average of 10.7% per year over the past five years.
The Nigerian stock exchange was one of the few stock exchanges on the continent with a negative return for January. The Nigerian All Share Index decreased by 2.36%, measured in euro. Investors are awaiting the elections scheduled for February 16. A peaceful change of power could give Nigerian shares a strong boost. In addition, the market (based on P/E) is trading at a discount of more than 25% compared to the long-term average.
The fund currently holds 36 shares, spread over 8 different countries. The countries with the largest weightings are Egypt (30.32%), Nigeria (22.99%), Morocco (15.77%) and Kenya (15.36%). These markets currently have the most interesting high dividend stocks that meet the quality requirements. The weighting of a country is mainly determined by the relative attractiveness of the market compared to other countries. The fund can therefore deviate strongly from the index.
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.