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 September, the fund rose 1.3%, even though the markets in Morocco and Egypt both lost about three-quarters of a percent. The markets in South Africa (+ 1.1%) and Kenya (+ 4.4%) were positive. Particularly Nigeria was strong this month: the All Share index showed a rebound of almost 10% after the central bank unexpectedly cut interest rates by one percentage point.
In Egypt, the central bank also unexpectedly cut interest rates from 9.25% to 8.75% for the first time since March. The interest rate cut is good news for companies in terms of liquidity, which has become quite tight since the pandemic. The stimulus comes at the right time for the economy, which is being held back by the coronavirus pandemic. Despite the virus, the International Monetary Fund (IMF) expects Egypt to see economic growth of 2% in 2020-2021.
The Moroccan private sector will benefit from two green investments totalling € 253 million, made available by the European Bank for Reconstruction and Development (EBRD), the European Union (EU), the Green Climate Fund (GCF) and South Korea. Thanks to this financial support, local businesses can acquire green technology and become more competitive, making a sustainable contribution to Morocco's economic recovery.
In the fund we have sold the position in Elsewedy. The Egyptian cable company is involved in the construction of a dam in Tanzania, located in an area listed on the World Heritage List. This can damage the ecosystem and increases the risks to the project and possibly the business. As a result, the company no longer meets our sustainability criteria. In its place Juhayna Food Industries has been added to the portfolio. The company manufactures high-quality dairy products and meets the investment criteria. We also increased the holding in Medinet Housing earlier in September. At the beginning of October the shares jumped as much as 7.4%, climbing to their highest since March 11, on speculation the Egyptian developer is considering selling a large land plot.
The fund currently has exposure to 31 stocks in 7 different countries. The countries with the largest weightings are Egypt (32.7%), Morocco (19.6%), and Nigeria (19.4%).
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.