Stanbic Investment Fund

Stanbic Bank Ghana’s open-ended unit trust fund to be primarily invested in fixed income securities has been tailored to investors seeking to maximise short-term income and seek long-term sustainable income and capital appreciation, Mr. Emmanuel A. Asiedu, Head of Stanbic Investment Management Services (SIMS) has said.

The Fund, dubbed “Stanbic Income Fund”, is a diversified fixed income unit trust under the management of SIMS and is directed at investors seeking to build up a diversified but liquid investment portfolio with minimum amounts under the professional management of qualified investment advisors.

The principal objective of the Fund is to optimise investors’ total returns comprising interest income as well as capital appreciation on assets held. The Fund will seek to maximise short-term income and seek long-term sustainable income and capital appreciation by investing in listed and unlisted fixed income securities in any organised market locally and internationally.

The Fund Manager will be responsible for determining the eligibility of assets to be held and will be expected to fully comply with the investment policy guidelines approved by the Trustees of the Fund.

Mr. Asiedu explained that the Fund sought to maximise short-term income, as well as long-term sustainable returns and capital appreciation.

“The Fund will focus on investment in fixed income securities, including bonds, notes, Treasury bills, commercial paper, placement with financial institutions listed and unlisted, and issued by governmental, quasi-governmental and corporate issuers across Africa.

“Common, or preferred shares, including convertible preferred shares, debentures convertible into common or preferred shares, share purchase warrants or rights, equity interests in trusts and joint ventures are also investment options available to the fund,” he said.

Dr. Joyce Aryee, Chief Executive Officer, Ghana Chamber of Mines who launched the Fund, said investing in products such as the SIF would no doubt generate the wealth needed for development.

Benefits of the Fund

Investing in the units of the Fund potentially offers several benefits. Many investors, particularly individuals, lack the information or capability to invest in a number of different securities; particularly when some of those securities are issued in different countries.

This could significantly change the characteristics of the investment portfolio in terms of risk diversification, liquidity and earnings. It also may not be permissible for such investors to invest directly in the capital markets of certain countries. The Fund offers investors the possibility of obtaining capital appreciation through a portfolio comprising securities of international issuers while still maintaining a strong concentration of portfolio assets in the country.

In managing such a portfolio, the Manager will provide the Fund and its shareholders with professional analyses of investment opportunities, the use of professional investment management techniques, and the opportunity to participate in other high-yielding markets.

Unlike some of the existing intermediary vehicles, such as investment companies that are limited to investment in a single country, the Fund has the ability to diversify investment risk among the capital markets of a number of countries - subject to the limitation that at least 80% of the total assets of the Fund must be invested in fixed-income instruments. The allocation of the Fund’s assets above this amount will be determined by the Manager.

Investment in other Investment Companies and Venture Capital Funds

The Fund may invest in other investment companies whose investment objectives and policies are consistent with those of the Fund. If the Fund acquires units in investment companies or venture capital funds, shareholders would bear their proportionate share of expenses in the fund (including management and advisory fees) and, indirectly, the expenses of such investment companies’ venture capital funds.

Investment Discretion
Investments of the Fund will be undertaken at the discretion of the Fund Manager acting in accordance with the Fund’s stated objectives, policies and restrictions as approved by the Trustees. Within these limits, the Fund Manager will be responsible for all decisions as to investment strategies, amounts and timing of the investments to be undertaken by the Fund.

Investment Strategies

The Fund’s investment management philosophy is based upon the premise that preservation of capital and the generation of income is the key priority. It will therefore seek to add value to clients’ portfolios through the use of modern investment disciplines and the development of appropriate benchmarks and reporting mechanisms.

The manager seeks to achieve the fundamental objective of the Fund by establishing criteria for the level of risk that the Fund wishes to accept whilst establishing performance benchmarks.

The investment process will begin with fundamental research and market analysis to identify the impact of expected macro-economic trends on the value of each portfolio.

This “top-down” approach will be combined with rigorous analysis of the asset classes available, as well as the individual securities to be selected. Due consideration will be given to issues such as the liquidity of the instruments, credit risk, historical and projected financial performance, price and trading history, and relative value analysis. Often, this will involve discussions with the management of issuers to gain insight into their businesses.

For fixed income investments, the Fund will evaluate the trade-offs between the various maturities available and determine the extent to which the pricing and liquidity of these securities adequately compensates investors for longer-term exposure.

As a result of this evaluation process, the Fund will at all times have a “universe” of potential investment avenues that will be updated on a regular basis and to which the Fund will be allocated. Investment decisions will be implemented primarily through banks and brokers, with whom the Fund will negotiate significant price concessions to keep transaction costs to a minimum.

The strategies of the Fund will be periodically reviewed and modified as market conditions warrant and as the Fund Manager deems such modifications to be in the best interest of the Fund. Holding periods for the Fund’s trading and investment positions will be principally dependent upon their anticipated short- to long-term income and capital appreciation potentials and the market conditions that may prevail over time.

Investment Policies

Under normal market conditions, at least 80% of the Fund’s total assets will be invested in fixed income of corporate and governmental issuers in Ghana or other regulated markets. A maximum of 20% of the fund will be invested in equities on any organised African exchange. The Manager may employ short-term tactical deviations from this policy asset mix of up to 20% of the Fund’s total assets.

This investment objective is a fundamental policy of the Fund and may not be changed without the authorisation of shareholders. The Fund will invest in securities of issuers in emerging markets that permit foreign investment and offer market accessibility and sub-custodial arrangements either inside or outside of such countries that satisfy the investment requirements of the Fund. In spite of the Fund’s objectives, the portfolio might change in the light of shifting market conditions.

The Fund believes that the quickening pace of political, social and economic change in emerging markets creates that potential for rapid economic growth which may be reflected in the prices of securities of issuers.

The Manager also believes that growth may result from government policies directed toward market-oriented economic reform. In addition, certain emerging market countries have been introducing deregulatory reforms to encourage the development of their securities markets, and in varying degrees to permit foreign investment. Nevertheless, investments in these countries are subject to international risks.

The Fund may invest in unrated or high-yield securities issued by corporate entities including debt securities, preferred stocks and convertible securities if they are considered by the Manager to be of high quality. The Fund may also invest in debt securities issued by governments (“Sovereign debt securities”), their provinces, municipal agencies and instruments (governmental entities), or by international or regional organisations that promote economic reconstruction or development in Africa.

Fund Manager
Stanbic Investment Management Services Limited, (“the Manager”) will act as the Manager of the Trust and provide it with management and investment advisory services. The Manager is owned and controlled by Stanbic Bank Ghana Limited (SBG) a Ghana-licenced Universal bank and a subsidiary of the Standard Bank Group, the largest bank in Africa with presence in 18 African countries and over 21 worldwide headquartered in Johannesburg, South Africa.

The Standard Bank Group is the largest asset manager in Africa, with over US$60billion under management. Leveraging on the group’s network and experience allows SIMS to tap into a world-class technological platform and gives it access to several frontier markets at low cost.

Being an open-ended Trust, units of the Trust will be created, offered and redeemed on a continuing basis throughout the life of the Trust. The Trust will thus issue new units when investors put in money and redeem units when investors withdraw money. The price at which units will be offered and redeemed will be determined by the Net Asset Value of the Trust.