A Business24 analysis of the 2019 annual reports of all five funds managed by leading investment firm Databank showed that the poor performance of the stock market last year depressed returns and contributed to a significant decline in the size of three of the managed funds.
Equity-based mutual fund EPack saw an 11 percent decline in assets under management, from GH¢186.1m to GH¢165.1m as at December 31, 2019.
The size of ArkFund, which is the country’s first and only ethical mutual fund, also declined by 23 percent from GH¢28.2m to GH¢21.9m, after recording a subdued return of 4.3 percent compared with the 11.8 percent recorded in 2018.
“The subdued return in 2019 was on account of the poor performance of equities during the year. Despite this, income from the fund’s fixed-income holdings sustained the returns of the fund,” said Joyce Aryee, board chairperson of the fund.
Databank’s Balanced Fund (BFund), a fund that balances between the growth potential of equity securities and the relative safety and income generation of fixed-income securities, recorded a 13.4 percent fall in managed assets to GH¢72.4m, despite its investor base going up by 7.3 percent to 25,563 shareholders in the year.
The fund closed the year at a price of GH¢0.6606, translating into a full-year return of 7.1 percent.
“Despite the present macroeconomic headwinds and the tough operating environment for the financial industry, we remain cautiously optimistic about the fund’s performance in 2020,” board chairman of the fund Kojo Addae-Mensah assured.
On the positive side, low-risk money market mutual fund MFund grew both its unitholder base and size, by 22 percent to 178,672 and 6 percent to GH¢633.6m respectively.
The Educational Investment Fund (EdiFund) Tier-1 grew by 13.1 percent to GH¢11.9m from GH¢10.5m recorded in the previous year, having ended the year at a price of GH¢0.2238 and a return of 11.4 percent.
The EdiFund Tier-2 also grew by 12.5 percent from GH¢20.3m to GH¢22.8m, supported by net inflows, with a 6.9 percent return and a year-end price of GH¢0.2029.
The combined shareholder base of EdIFund increased from 25,198 to 33,134 during the period.
Last year, the GSE Composite Index, which measures the performance of stocks of listed companies, recorded a negative return of 12.2 percent, while the financial stocks index, which measures the performance of listed stocks of financial institutions, recorded a negative return of 6.2 percent.
The stock market has suffered further declines this year, with the GSE Composite Index falling by 16.6 percent since the beginning of the year to July 15 and the financial stocks index falling by 14.1 percent in the same period.
Despite this, managers of the funds have assured investors of innovative investment strategies that will offer impressive yields in a Covid-hit stock market.
Mr. Addae Mensah said: “We will continue to work tirelessly to deliver sustainable risk-adjusted returns in the medium to long term.”
“While we recognise the tough and volatile macroeconomic environment in which we operate, we have taken the necessary precautionary measures to ensure that MFund continues to yield significant value for you, our unitholders,” Benjamin Gogo, board chairman of the fund, also assured.
Kojo Addae-Mensah is CEO of Databank and board chairman of Balanced Fund, one of the funds managed by the investment company.