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
Since the start of the year, the fund price has increased 8.27%, while the benchmark went up 7.58% over the same period, both measured in euro and based on total return.
GDP growth on the African continent is expected to accelerate from 3.5% in 2018 to 4% in 2019, making it the fastest growing region in the world after Asia, according to the African Development Bank. And that is "despite" Nigeria and South Africa, which make up almost half of the continent's GDP. Nigeria's GDP will increase by 2.3% in 2019, which is below population growth. The government is struggling to reduce the nation's oil dependency and to attract foreign investment. Currently, strong growth comes mainly from Ethiopia, Kenya, Rwanda and Tanzania. But Egypt is also doing well. Production in this country will increase by around 5.5% in 2019, as government structural reforms attract more investments.
The fund sold Kuwait Holding in Egypt last month because the dividend yield has fallen due to the recent rally. The price has risen by almost 50% since the start of the year. Instead, we bought Canal Shipping in Egypt. This ports agency is trading at 9.8 expected earnings with a dividend yield of 7.5%.
The fund currently has positions in 36 stocks across 7 different countries. The countries with the largest weightings are now Egypt (29.87%), Nigeria (26.66%) and Morocco (16.87%). These markets currently have the most interesting high dividend stocks that meet the quality requirements. The weighting of a country is therefore mainly determined by the relative attractiveness of the market compared to the other countries. The fund’s holdings can therefore deviate strongly from the benchmark.
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.