Monday, November 12, 2012

Mutual Monday: What you must know about EPACK, the 'Praise-the-Lord' fund.


It's another Mutual Monday and welcome to journey to mastering mutual funds and unit trusts. With reference to my previous post, (Mutual Monday: Investment Funds (mutual funds & Unit trusts) in Ghana), let's take the funds one by one and know more about them. Let start with EPACK.
EPACK is a mutual fund, established and managed by Databank Financial Services since 1996. It is a long term (from 3yrs) investment fund that pools money in different amounts from different people for investment  primarily in Shares listed on the Ghana Stock Exchange.

EPACK is seen by some people as a less risk investment compared to investing directly in the stock market.  This school of thought believes that, the risk is shared by all Epack investors just as all other mutual funds. This is true but there are a lot more risks attached to investing in a stock market oriented (about 70%) mutual fund. I would leave that for another day but know that Epack is able, courtesy of the mobilized funds, to invest in more securities on the GSE and thereby reduce risk through diversification.
Historical data has proven that, a GHc 1000 investment in Epack in December 1996 would grow to Ghc 3990 by December 1998, and this would further grow to Ghc 11,920 by Dec. 2002. When that amount is still kept in Epack, it would grow to Ghc 57,080 and then increase to Ghc 83,130 by Dec. 2008. Data from the past performance also shows that if one keep that same amount till Dec. 2010, it would become Ghc 99,930. Below is the various returns from 2004 to 2010.

  
Epack is obviously not performing now as it used to perform in those years. Don't just rush and go and put your money into something you don't really understand. Growth has been slow in the past two years. Epack does not only invest the pool of funds in the Ghana but also diversity into other countries. In 2010 for instance, Epack invested 47% in Ghana, 12% in Egypt, 2% in South Africa, 8% in Botswana, 4% in Nigeria, 13% in Malawi, 5% in Uganda and the rest in Kenya, Tanzania, Mauritius and Cote d'Ivoire.
Over the years, Epack invested in companies like Fan Milk Ltd (Ghana), Ghana Commercial Bank Ltd. (Ghana), SG-SSB Ltd (Ghana), National Societe General Bank ltd. (Egypt), Enterprise Group Ltd. (Ghana), CRDB Bank Ltd. (Tanzania) Medine Sugar Estates Co. Ltd. (Mauritius), Illovo Sugar Ltd. (Malawi), Press Corporation Ltd. (Malawi).
Last year, Epack invested 59% in Non-Financial Stocks and 41% in Financial Stocks. The investment in Ghana was also reduced to 36.30% and the rest of the funds invested outside Ghana exposing our monies to other economic pressures and global recession.
Epack currently has two Fund Mangers, Daniel Ogbarmey Tetteh and Evelyn Ofosu Darko who use biblical quotations to assure shareholders of the future performance of the fund. Their final words for shareholders last year was a quotation from the Bible, James 5:7b-8a (NIV) that states that, ‘See how the farmer waits for the land to yield its valuable crop and how patient he is for the autumn and spring rains. You too, be patient and stand firm’. This is what I call, "Biblical Fund Management" or 'God would make it' fund management. Despite what people say, Epack still has good financials and fund managers and long term investors can consider it as an investment opportunity.

  Below are the Epack's top ten equity holdings for 2011. 

2011 Top Ten Equity Holdings of Epack.
In my next post we would look at the ifund, which is managed by the EDC (now Ecobank Capital). There would be future projections for each of the mutual funds and how and when one can take advantage of them. 


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