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 June, the fund was 1.4% higher at the end of the month, while the benchmark index fell 0.5%. In May, the Egyptian stock market was the biggest loser, but in June it was the biggest winner (5.0%). The Nigerian stock market was the biggest winner last month, but the biggest loser this month (-4.0%). In Morocco, with a 20% weighting in the fund, the stock market rose by 1%.
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 have overweight, making them less susceptible to the virus.
The economic damage probably is past its worst in Egypt. Activity indicators deteriorated at a slower pace in June. The government has now lifted a number of restrictions, as companies adapted by firing staff and cutting salaries. The Egyptian PMI increased rose from 40.7 in May to 44.6 in June. In addition, capital inflows into the country have resumed for the first time since February, suggesting more confidence among investors.
In Nigeria there are also signs of economic stabilization. Particularly the strong recovery in the oil price was positive. Despite this recovery, Nigerian banks have asked the central bank for permission to restructure its loan portfolios because of the economic impact. To further boost the economy, the Nigerian Senate has approved a $ 5.5 billion stimulus package.
The fund currently holds positions in 30 stocks in 7 different countries. The countries with the largest weightings are Egypt (23.3%), Morocco (20.7%), and Nigeria (18.1%). 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.
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.