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 month of September, the fund was down 0.6%, while the benchmark index rose 2.0%. With exception of Egypt (-2.7%), sentiment was positive in African countries such as Morocco (+4.8%), Nigeria (+4.4%) and Kenya (+2.1%). The biggest increase this month was the share Standard Chartered Bank Ghana (12.5%).
In Ghana, President Nana Akufo-Addo announced that the economy grew by 8.9% in the second quarter from an initial estimate of 5%. This makes the country one of the fastest growing economies in the world. Ghana's economy has remained relatively strong during the corona pandemic. While most countries were in recession, GDP growth in Ghana remained positive at 0.4% for the full year. Within the portfolio, in addition to Standard Chartered Bank, we also have positions in Cal Bank and Ecobank Ghana which have increased by 27% and 20% respectively, measured in euro on a total return basis. Despite this, both banks still trade at a P/E of less than 2x with a dividend yield of around 15%.
Morocco's Islamist Party (PJD) suffered a crushing defeat in parliamentary elections in early September. The moderate Islamist party, which was the largest for ten years, went from 125 to 12 seats. The liberal party RNI won convincingly; from 27 to 97 seats. The outcome has been welcomed by investors as a return to a more market-friendly government in a country developing its position as a car manufacturing and trading centre on the fringes of Europe. Pro-business parties are back - and that gives hope that the necessary (economic) reforms will be implemented.
The fund currently holds 30 stocks in 7 different countries. The countries with the largest weightings are Egypt (30%), Morocco (19.6%), and Nigeria (19.4%). These markets currently have 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.