5/13/10 Epa¢k
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
600
On Slideshare
600
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
0
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. The Epa ¢ k Story – The Making of A Pan-African Mutual Fund By: Kwesi Amonoo-Neizer Executive Director, Databank Asset Management Services Limited
  • 2.
    • Background
    • Investment Objective
    • Investment Policy & Strategy
    • Investments of Epack
    • Adventuring into Africa
    • Performance
    • Conclusion
    Contents
  • 3.
    • The Epack concept was borne at presentation to a pre-retirement Association of Bank of Ghana (BoG) workers
    • Originally designed to enable 5 BoG staff to participate collectively in the Ghana stock market via an Investment Club .
    • Transformed from an investment club into an Investment Company in 1998
    • Converted from an investment company into a Mutual Fund in 2002, managed by Databank .
    Background- How Did it Start?
  • 4.
    • Epa ¢ k is the 1st licensed equity mutual fund in Ghana
    • Epa ¢ k is listed on the highly reputed global mutual fund website, called the Morning Star
    • A pan-African Equity mutual Fund holding investments in 10 countries
    Background -Special Feats
  • 5.
    • Epa ¢ k is a long-term fund and therefore invests in the shares of listed companies
    • As of Dec. 2006, the Fund held investments in Ghana and in 9 other African markets (Nigeria, Botswana, Kenya, South Africa, Mauritius, Uganda, Zambia, Morocco and Malawi).
    Background- Type of Fund?
  • 6. Background- Growth of Shareholders 5 Over 65,000 Dec. 1996 Sept., 2007 Fig. 1
  • 7.
    • Objective of the Fund is to provide long-term capital growth via:
    • Investing in a diversified portfolio of listed shares in regulated markets in Ghana & Africa .
    • It’s mainly an equity fund - up to 80% of portfolio
    Investment Objective
  • 8.
    • Value investments philosophy-That’s identify and invest in firms which are expected to provide superior returns over a 5-year period.
    • Macro economic fundamentals are important but not enough
    • Quality/soundnes s of underlying business of stocks is vital to our investment decision making- ‘Bottom-up Approach’
    • Valuation model is based on intrinsic value of stocks
    Investment Policy & Strategy
  • 9. Investments of Epack Fig. 2
  • 10. Investments of Epack Table: 1 * As at 28 Sept, 07 10,513.95 2,930.64 1,265.17 772.08 385.89 49.39 Epack Value (¢ million) 76% 85% 86% 95% 98% 96% Stock as % of total portfolio 7 7 7 7 6 6 No. of Industries 1 1 1 1 1 1 No. of markets 52% 56% 62% 67% 74% 73% Top 5 as % of total portfolio 13 12 13 12 10 11 No. of Stocks 1.26 0.40 0.18 0.22 0.16 0.02 Epack Value ($ million) ¢1,191.63 ¢701.37 ¢465.06 ¢388.5 ¢399.1 ¢179.50 Share Price 2002 2001 2000 1999 1998 1997
  • 11. Investments of Epack Table: 2 * As at 28 Sept, 07 73.59 41.58 28.02 36.05 8.52 Epack Value ($ million ) 77% 77% 87% 76% 69% Stock as % of total portfolio 10 9 11 11 8 No. of Industries 10 9 7 6 2 No. of markets 24% 29 31% 28% 44% Top 5 as % of total portfolio 39 37 54 52 25 No. of Stocks 693,877 382,921 254,642 325,564 74,998 Epack Value (¢ million) ¢7,728 ¢5,707.76 ¢4,326.95 ¢4,536.91 ¢2,822.38 Share Price 2007* 2006 2005 2004 2003
  • 12. Top 5 Holdings –Half Yr 07 Ghana Comm. Bank: 8% Guaranty Trust Plc : 7% First Bank Nigeria Plc: 6% Unilever Ghana Ltd: 6% Standard Chartered Bank:4% /Mauritius Comm Bank: 4% Fig. 3
  • 13. Fig. 4 Investments of Epack - Holdings in Africa Half Yr 07
  • 14. Internationalisation- Epack’s Adventuring in Africa
  • 15. Adventuring in Africa Fig. 5 Epack Presence
  • 16. Adventuring in Africa
    • Nigeria Experience
    • Foray into Nigeria in July 2003;
    • At that time, Nigeria was regarded as high risk;
    • It was seen to be off limits to foreigners;
    • Evidence showed that the NSE was an attractive investment;
    • Average dollar return between 1998 – 2003 was 7% compared to - 1% for the GSE;
  • 17. Adventuring in Africa (Cont’d)
    • Several companies traded at attractive valuations;
    • Main challenge was to locate a custodian;
    • Only one custodian at that time;
    • Choice of broker was also challenging;
    • Communication systems made T + 3 settlement very challenging;
  • 18. Adventuring in Africa (Cont’d) Table: 5 193.48% 9,504,239 4,588,587 508,736 4,975,399 4yrs 208.87% 315,056 22,370 109,244 PZ Nigeria 1yr 168.51% 557,830 367,304 344,541 Cornerstone 1yr 7.08% 307,057 286,752 Ashakacem 2yrs 74.31% 55,824 2,451 33,432 Total 2yrs 33.83% 43,634 2,299 34,323 UAC-Prop 4yrs 252.18% 501,925 13,034 146,222 UACN 2yrs 51.89% 69,476 3,961 48,349 Nestle 2yrs 48.16% 87,781 5,395 62,891 7 UP 2yrs 67.04% 39,188 961 24,036 Cadbury 3yrs 144.92% 1,497,340 372,639 53,989 785,538 Zenith Bank 3yrs 112.16% 1,464,290 63,134 719,938 United Bank For Africa 4yrs 449.37% 2,922,574 112,455 552,456 Guaranty Trust 2yrs 0.95% 200,053 11,788 209,840 Union Bank 4yrs 240.44% 3,709,514 1,581,342 216,899 1,617,837 First Bank Holding Period Total Return Value as at 30/9/07 Sales Dividends Purchases (US$) Stock
  • 19. Adventuring in Africa (Cont’d)
    • Mauritius Experience
    • First investments made in October 2004;
    • Economy had shifted into a low growth phase;
    • Traditional economic drivers such as sugar and textiles were in decline;
    • Serious debate on how to re-establish high growth levels;
    • Tourism and financial sector identified as future growth pillars;
  • 20. Adventuring in Africa (Cont’d)
    • Move to develop a knowledge based economy with outsourcing at the centre;
    • Challenge of how to deploy redundant workforce;
    • Friendly foreign investor climate;
    • Low levels of liquidity;
    • Market seemed fairly valued on historical basis but cheap compared with other markets.
  • 21. Adventuring in Africa (Cont’d) Table: 6 94.00% 7,396,776 1,380,727 554,346 4,810,212 Medine SR NMH Rogers SBM MCB Stock 1,719,960 169,348 234,601 310,597 912,329 1,463,376 Purchases (US$) 13,264 37,921 35,399 36,808 237,874 193,079 Dividends 422,862 957,865 Sales 1,499,754 335,227 764,037 2,005,226 2,792,533 Value as at 30/9/07 -12.03% 120.34% 95.34% 157.84% 145.87% 169.48% Total Return 1yr 3yrs 2yrs 3yrs 3yrs 3yrs Holding Period
  • 22. Adventuring in Africa (Cont’d)
    • Kenyan Experience
    • First investment made in March 2004;
    • Country was just coming out of a period of bad governance;
    • Kenya was emerging from a period of low growth rates;
    • Perceived to be corrupt;
    • Country was experiencing bad foreign press;
  • 23. Adventuring in Africa (Cont’d)
    • Very little foreign interest in the stock market;
    • Relatively well-developed capital markets;
    • Domestic interest in the stock market was beginning to pick-up;
    • Large capitalized stocks were fairly liquid.
  • 24. Adventuring in Africa (Cont’d) Table: 7 148.19% 463,357 2,575,561 45,365 1,242,715 1yrs 138.10% 24,500 751,736 326,011 CMC 2yrs 236.71% 438,857 1,261,052 20,872 511,060 Kenya Airways 1yrs -14.52% 121,111 5,704 148,357 Standard Chartered 1yrs 65.87% 242,727 14,433 155,035 Barclays 1yrs 98.81% 198,935 4,356 102,252 EABL Holding Period Total Return Value as at 30/9/07 Sales Dividends Purchases (US$) Stock
  • 25. Adventuring in Africa (Cont’d)
    • Lessons
    • A well conceived investment strategy and philosophy can be applied both domestically and internationally;
    • It is possible to enhance returns and reduce risk through international diversification;
    • Mobilization of resources in Africa for Africans is possible and very feasible;
    • If it can be done in Ghana, it can be done in the other African Countries;
  • 26. Adventuring in Africa (Cont’d)
    • Nearly all the African Funds target non-African investors;
    • Need to make these opportunities available to Africans through the creation of collective investment industry for Africans;
  • 27. Adventuring in Africa (Cont’d)
    • Challenges
    • The need for greater co-operation between regulators and market operators in the development of the industry;
    • Existence of over-regulation in many markets;
    • Need to make it easier for capital to flow between African countries;
    • Resistance to opening up the capital account;
  • 28. Adventuring in Africa (Cont’d)
    • Pension reforms have increased the pool of capital;
    • Doubtful whether all of it can be effectively employed local;
    • Be careful that our enthusiasm does not lead to investment bubbles;
    • In the mid – 1990’s, Africa was referred to as the last frontier;
    • How is this frontier different from the frontier in the mid-1990’s?
  • 29. How Has Epack Performed ?
  • 30.
    • Epa ¢ k has been the best performing mutual fund in Ghana and one of the best in Africa with a consistent 10 year record
    • Cumulative ROI since inception was 974% in $ terms as at December 2006 and 1,249% in $ terms as at July 31, 2007
    • YTD ROI as at Sept 28, 2007: [ 32.2% in $ terms]
    Performance-ROI
  • 31. Performance-ROI *ABRALL Returns is over 9 years Fig. 6
  • 32. Performance-ROI *ABRALL Returns is over 9 years Fig. 7
  • 33. Performance-ROI Epa ¢ k Yearly Returns Oct. 1996-Dec. 2006 Source: Databank Research Table: 8
  • 34. Performance-ROI Source: Databank Research Fig. 8
  • 35.
    • Epa ¢ k started with only ¢ 250,000 [$27] in 1996.
    • Value as of Dec. 2006, was ¢ 382bn [$41.3m]
    • Value is as at 18 Oct., 07) ¢ 737bn [$78m]
    Performance – Value of Funds
  • 36. Performance – Value of Funds Table. 9
  • 37.
    • Epa ¢ k has the biggest market share among all the 9 mutual funds in Ghana (both equity and money market funds)
    • Market share by value of funds under management as at Dec. 2006 was 57% (Databank Research)
    • Market share by size of customers as at Dec. 2006 was 63% (Databank Research)
    Performance – Market Share
  • 38.
    • The introduction of Epa ¢ k in Ghana in 1996 was an innovation in its own right:
    • Epa ¢ k is not only the 1st licensed mutual Fund in Ghana but also a Pan-African Mutual Fund with investments in 10 African countries
    Conclusion
  • 39.
    • Epa ¢ k has been the best performing mutual fund in Ghana and one of the best in Africa with a consistent 10 year record.
    • Cumulative returns on Epa ¢ k over the last decade has surpassed comparable instruments in the African market.
    Conclusion
  • 40.
    • Databank , is a leading brand in investment banking in Ghana/Africa- Credited with many firsts in the market such as:
    • First to develop a market index, the Databank Stock Index ( DSI) for the GSE;
    • First to introduce an equity mutual fund, Epack
    • First to introduce a money market mutual fund, Databank Mfund;
    • And recently voted as the Best Research Firm in Africa by Ai Index Series Awards in London.
    Conclusion
  • 41.
    • Databank , has leveraged on its:
    • Strategic Vision
    • Well-trained and experienced Human Resources
    • Sound Management Practices
    • International Networks
    • Capabilities & Commitment
    • To enable many Ghanaians and other nationals meet various financial goals.
    • It can be done for you too!
    Conclusion
  • 42. Thanks for your Audience Epa ¢ k – Ghana’s # 1 Mutual Fund! www.databankgroup.com