Africa
Fund profile
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.
Sustainability
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).
Fund performance
The Fund Manager writes
In May the index lost 2.4% in value and the fund 4.4%, both measured in euro. Stock markets fell worldwide as a result of an escalation of the trade dispute between the US and China. Measured since the start of the year, the fund is still in positive territory with a rise of 3.4%. During this period, the number of outstanding shares grew by 27,226, setting the total number of outstanding shares to 837,032.
Although African markets generally have a low correlation with developed markets, this further escalation may have put some pressure on stocks. For example, the stock markets in Egypt (-5.4%), Morocco (-1.4%) and Kenya (-4.1%) went down measured in euro. Nigeria was a positive outlier with an increase of 8.3%. This increase was mainly due to Dangote Cement (+ 11.8%) with an index weighting of 30.4%. Although the stock does comply with most of our quantitative criteria, it does not reach the final selection in the portfolio based on the ESG screening (“human rights issues”).
The economic future looks good for some of the countries within the African universe. In Egypt, the purchasing manager’s index has risen to 50.8. The highest level in 3.5 years. For Nigeria hopes are that the central bank will further cut interest rates to boost economic expansion. The economy is recovering from the 2014 crash in crude prices and the International Monetary Fund forecasts that growth will accelerate to 2.1% this year from 1.9% in 2018. That would still leave it as one of Africa’s least buoyant economies and will be below the rate of population growth, which is almost 3%.
Since the beginning of this year, Kenya has contributed most to the fund's return. In 2018, the Kenyan economy grew at the highest pace in eight years and can grow at a similar pace (6.3%) this year. Kenya generated 840,600 new jobs in 2018, inflation was 4.7% in 2018, which is much lower than the 8% in 2017. The current account deficit decreased to $ 4.1 billion. About 2 million tourists visited the country last year. After agriculture, tourism is the largest source of incoming foreign currency.
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Disclaimer
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.
