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).
The Fund Manager writes
After the African markets lost more than 25% of their value in the first quarter, a recovery started in April. The fund rose 9.3% in the past month, outperforming the index (5.9%). Within the portfolio, we saw a particularly strong recovery in the countries Egypt (13.4%) and Nigeria (9.0%), returns measured in euro. The biggest riser in portfolio was Dangote Sugar Refinery (39.7%) in Nigeria.
Compared to other parts of the world, the number of corona cases in Africa is relatively low. African countries may be less vulnerable to the rapid spread of the coronavirus than many people fear, partly caused to their experiences with Ebola. They can quickly roll out many of the procedures and precautions they have taken against Ebola. In addition, the population in many African countries is relatively young and fewer people are overweight, making them less susceptible to the virus.
Beside the virus, a number of African countries is fighting against another enemy. Grasshoppers threaten the food supply in East African countries such as Ethiopia, Kenya, Somalia, Uganda and Tanzania. Control is now made more difficult by the corona pandemic. Pesticides from Japan, for example, hardly find their way to Kenya due to aviation problems. In Kenya, the combat continues with the help of the Kenyan army and, for example, the National Youth Brigade.
In Egypt, the country with the largest portfolio weighting, the government announced an incentive package in April to mitigate the impact of the corona virus. The stimulus is worth 100 billion Egyptian pounds (7 billion euro) in loans made available by the central bank. In addition, a number of business sectors will have deferment for paying taxes and loans are being provided to the tourism sector under very favourable conditions.
The fund currently holds positions in 30 stocks in 7 different countries. The countries with the largest weightings are Egypt (25.6%), Morocco (19.2%), and Nigeria (18.7%). 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.
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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.
