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
In February the fund was down 2.5% and the benchmark fell 0.8%. In Egypt, the market was almost flat (+ 0.2%), in Morocco the market fell -1.9% and in Nigeria prices fell sharply (-12.6%). In Kenya sentiment was positive and the index was able to close 7.1% higher. The biggest riser this month was Calbank with an 11.3% rise. Safaricom's share also rose 6.7% and reached a new high after the company announced that it would pay a bonus dividend. Other dividend news came from Zenith Bank, the dividend for shareholders is increased by 8%, which means a dividend yield of 12% at the current price. This makes the Nigerian share particularly interesting for local pension funds that are more investing in shares compared to bonds.
In Nigeria sentiment was under pressure due to the decline of the Naira. The Nigerian government disagrees with the IMF's recommendations to further cut the currency, which is 18% overvalued, to reduce external imbalances. The government sees currency pressures from global outflows triggered by the coronavirus pandemic and believes a fresh depreciation would contribute to high inflation. Nevertheless, the government is expected to devaluate sooner or later this year. This will encourage other investors to buy Nigerian money or investments again as their dollar or euro can buy more Naira, also helpful for carry trade benefits. In addition, the inflow of this foreign capital can significantly strengthen the reserve position.
Finally, the PMI in Kenya increased by 50.9, the 8th consecutive month of increase. Economic activity picked up as a result of an increase in consumer spending and improved cash flows in the economy and the reopening of schools and businesses.
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.