By Belinda Ayamgha, GNA
Accra, July 11, GNA - Databank has posted good performance on five of its investment Funds for the 2017 financial year, the first time that all five funds have performed positively, with the BFund recording the highest performance, followed by the Epack.
Mr. Kojo Addae-Mensah, Chief Executive Officer of Databank, noted that in 2015 and 2016, some of the funds such as the Epack had struggled in their performance, owing to the unfavourable economic environment, but had been able to recover to post significant results in the year under review.
Mr Addae-Mensah said in an interview with the GNA at the Annual General Meetings of the MFund, EdiFund, BFund, Epack and ArkFund, held in Accra on Wednesday.
He explained that Epack struggled in 2015 and 2016 because the stock markets across Africa were dipping, adding that, similar situation happened in the second half of the year.
“For the year under review specifically, all five Funds were in positive territory. I think the best performing Fund was probably BFund, which was close to 40 percent returns and Epack was in its 30s, MFund was in its late teens, so it was quite a good year for us,” he stated.
He said the Bank has faced initial challenges with the rapid decline in interest rates but added that they had anticipated that to happen and had prepared for it by positioning itself to take advantage of longer-dated bonds.
He said Databank took advantage of government’s efforts to correct the yield curve and refinance short term debt with longer term debts at slightly higher rates.
“We took advantage of ESLA, we took advantage of the 10 year bond and the five-year bond and that has helped,” he said.
The Pan-African strategy for its equity funds, he noted, was very helpful, but could also go wrong as had happened in 2018, with Ghana, Nigeria, Egypt and Kenya down, a situation, which was really impacting the Funds.
Mr. Addae-Mensah said the performance of the Funds for the first half of 2018 was not too good but was hopeful that it will begin correcting by the second half as the Securities and Exchange Commission will have finished raising its rates and foreign investors will have finished taking their profits.
“The second half, especially, the latter part should see a correction,” he said. Locally, he noted that interest rates will remain low, although it may not drop further, and advised investors to be wary of those who promise extraordinary rates this year.
In light of these, he said, there will be some slow decline in the returns of its fixed income Funds like the Mfund, EdiFund (Tier) and the BFund, which had a lot of investments in fixed income instruments.
However, the decline will not be so huge due to the lock-in of longer term rates that are yet to mature.
The Bfund, which is the best performing fund of the five, ended the 2017 year at a price of GH¢0.5768 per share, representing a return of 30.91 percent.
It also recorded a 43 percent year-on-year growth in its investor base to 15, 626 mandates at the end of 2017, while growing its Assets Under Management by 150 percent approximately to GH¢48.11 million.
Mr Addae-Mensah, who is also the Chairman of the Board of the BFund said he was optimistic of the performance of the fund in 2018 given its large exposure to the equities market, which is expected to do well in light of the decline in treasury securities.
The Epack, although recorded a price gain of 37.73 percent to close the year at GH¢3.4078 per share, underperformed the benchmark indices in Ghana (52.73%), and in Nigeria (42.30 %).
It however, outperformed other African markets such as Bourse Regionale des Valeur Mobilieres (BRVM) and Kenya, which stood at -16.81 and 28.39 percent respectively.
The Mfund, according to Mr Benjamin Gogo, Chairman of the Board, although it saw a decline in its returns due to the decline in yields of short term sovereign securities, still posted significant gains, beating the 91-day T-Bill benchmark rate to close at GH¢1.0488 per share, a return of 20.55 percent compared with an average annual yield of 14.11 for the 91-day T-Bill.
The EdiFund Tier, which helps investor cater for short-term education needs, also performed remarkably well against its benchmark; the one-year Government of Ghana note, ending the year at GH¢0.1804 per share, representing a return of 19.30 percent, which the benchmark stood at 13.35 percent.
The Tier 2, which is for longer-term needs also outperformed its benchmarks; the GoG one-year note and the Ghana Stock Exchange Composite Index. It ended the year at GH¢0.1753 per share, a return of 20.48 percent.