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 November, the fund was up 7.8%, while the benchmark index rose 3.5%. In Kenya (-4.9%) the stock market fell, but sentiment was positive in Nigeria (10.6%), Morocco (4.4%) and Egypt (4.2%). The biggest riser was Airtel Africa, this African telecom share gained 32.3%.
Sentiment on the Nigerian stock market was again very positive this month. Local pension funds have always been underweight stocks with an average of approximately 5% of invested capital. Pension funds typically bought government bonds for yields that matched inflation or higher. But this situation has now changed. Short-term bonds have a yield of 4.2% and longer-term bonds 6.1%, while the dividend yield on shares is higher (for example: Zenith Bank 11.8%, Dangote Sugar 6.5%, Guaranty Bank 8.4%). Local pension funds now invest more in shares and as a result the Nigerian stock market is 24% higher this year, measured in euro and total return.
In Egypt, the central bank has cut interest rates from 8.75% to 8.25% for the second time in a short period. 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 moment for the economy, which is also being held back by the coronavirus pandemic. Despite the virus, the International Monetary Fund (IMF) expects an economic growth of 2% for Egypt in 2020-2021.
The fund currently holds 31 stocks in 7 different countries. The countries with the largest weightings are Egypt (31.4%), Nigeria (23.2%), and Morocco (20.3%). These markets currently contain the most interesting high dividend stocks that meet the quality requirements.
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.