Investment yield on NTHC Horizon Fund declines
Annual investment yield on the NTHC Horizon Fund dipped from 35.16 per cent in 2013 to 11.42 per cent in 2014.
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The decline, according to the Fund Manager, Mr Andrew Tetteh, emanated from losses its investments made on the capital market coupled with worsening economic conditions. The fund, however, recorded steady growth on investments on the money market.
“The energy crisis prevailed throughout the period, stifling all sectors of the economy, specifically the manufacturing and industrial sector. This, together with inflationary pressures, utility price increases and the sharp depreciation of the Cedi made the operating environment quite unfavourable. Consequently, the performance of the fund was adversely affected,” he said.
In an interview with the GRAPHIC BUSINESS on the sidelines of the 10th Annual General Meeting (AGM) in Accra, Mr Tetteh said the 2014 performance reflected the balanced nature of the fund as its investments fall between the capital and the money markets.
“This performance reflects the balanced nature of the fund as it falls between that of the Ghana Stock Exchange (GSE) Composite Index, which posted an annual return of 5.40 per cent and the 1-year treasury bill which stood at 22.50 per cent at the end of the year,” he said.
The fund’s investments on the money market in 2014 recorded a growth of 40.81 per cent while returns on the capital market recorded a marginal increase of 7.39 per cent.
“The latter’s performance was caused by significant losses of 60 per cent, 50 per cent and 41.56 per cent recorded by Aluworks Limited, Starwin Products Limited and Unilever Ghana Limited respectively,” he said.
Prudent management
Mr Tetteh said 2015 was a challenging year for the fund management industry as it sought to make returns in the face of declining interest rates, rising inflation, poor performance of the capital market, fluctuating macroeconomic fundamentals and the pressures on the local currency in the foreign market.
“Performance in the industry will ultimately boil down to strategy and prudent management. The building fundamentals for an improved performance in the NTHC Horizon Fund have already been put in place and we look forward to better performances,” he said.
He said rebalancing of the Horizon Fund in 2014 helped it make some marginal gains and therefore urged shareholders to continue investing in the fund.
“I entreat all shareholders to continually increase investments in the fund as this will allow us to continue rebalancing the fund’s assets in order to take advantage of emerging opportunities,” he added.
Assets of the fund
The NTHC Horizon Fund is a balanced mutual fund with the objective of preserving and enhancing shareholder wealth to meet medium to long-term financial goals while creating liquidity to meet short-term needs.
As a balanced fund, the NTHC Horizon Fund invests in a combination of listed equities, bonds as well as other suitable fixed income securities to achieve its investment objective. As at December 31, 2014, listed equities made up 58.04 per cent of the fund’s assets with fixed income securities and cash balances making up the remaining 41.96 per cent.
The value of the fund ended the year 2014 at GH¢2million from about GH¢1.8million in the previous year, representing an increase of 14.07 per cent. In relation to the fund’s shares, total subscriptions were 345,971 shares during the period, while a total of 182,009 shares were redeemed. This resulted in a net increase of 163,962 issued shares for the year 2014.