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 last month of the year the African markets were mainly positive, which resulted in a return of 2.7% for the fund compared to the benchmark return of 3%. South Africa had a positive month, where the JSE African all-share Index rose by 6%. Among the individual positions, Standard Chartered Bank in Ghana was the top gainer with a return of 38%. In 2019 Ghana bank shares were under pressure, but buying interest is coming back now that the shares trade at a historical low valuation. It is also expected that economic growth in the country will pick up in 2020. On a macroeconomic level, there was news from Nigeria, where the purchasing manager’s index rose to 60.8. Production in the country is growing rapidly. As a result, employment also continued to grow for the third month in a row. This growth is expected to continue in 2020. According to the IMF, the economy in Nigeria can grow 2.4% this year, if oil revenues in particular show stable growth. The IMF indicates that higher growth is possible, but then reforms must be implemented. This requires more investments in growth-driven sectors such as energy, agriculture, industry and telecom. The IMF was also positive about Morocco in December. The country has made significant progress in recent years in strengthening its economic resilience with the help of a conditional loan of $ 3 billion. Further reforms in education, government and the labour market will result in more sustainable and structural growth. A new name has been added to the portfolio; Obour Land For Food Industries. The Egyptian company is specialized in producing high-quality white cheese. The share is trading at 9.5x expected earnings and a dividend yield of 4.7%. The fund currently holds positions in 31 stocks in 7 different countries. The countries with the largest weightings are Egypt (25%), Nigeria (21.3%) and Kenya (19%). These markets currently have the most interesting high dividend shares that meet the quality requirements. The weighting of a country is therefore mainly determined by the relative attractiveness of the market compared to other countries. Consequently, the composition of the fund can differ significantly from the benchmark 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.