To what extent do you trust your investment brokers?

investment brokers _trust

There are various services generally provided by investment brokers in Ghana. Out of these offered services, the common ones are trading of stocks on clients’ behalf, management of investment funds, and investment advisory services. Investment brokers’ role in the financial sector can therefore not be understated. Nevertheless, as humans as they are, they equally make mistakes. These mistakes range from petty ones such as carelessness to critical ones that can result in devastative effects on clients’ investments. Hence, as investors, it is essential to be alert and be aware of the extent to which our investment brokers can be trusted. It is always important to ensure that our investment brokers (and advisors) really have our interests at heart. This can be attained by paying attention to typical attributes such as honesty and transparency, competency, reputation and track record.

Investment brokers are expected to be honest and transparent without withholding vital information from their clients. Information such as clear fee structure, performance updates, financial statements and reports should be readily available to clients to make informed decisions. Getting regular feedback from your brokers should not be too complicated. Certainly, investment brokers must keep their clients in the loop and present them with the available lucrative [investment] options for decision making. However, it is unfortunate that the nature of their job, these days, appears like that of salespersons- They tend to be primarily concerned about revenue generation for their financial institutions (employers). Investment brokers seem to rather focus on the promotion and market of their investment products. Of course, the more they sell their investment products, the more revenue they make through management fees and other commissions. After all, what commission or management fee would NTHC brokerage make if it endorses FirstBanc Heritage fund instead of NTHC Horizon fund? Similarly, you don’t expect Databank financial services to recommend SAS Fortune fund to its clients while they have their own [Epack] investment fund. In much the same way, it would be unheard of if SAS Investment Management recommend Epack mutual fund for their prospective clients even if Epack overwhelmingly performs better than other funds. Clearly, investment brokers and their financial institutions favour their own products which may put their credibility to test.

The reputation and track record of brokers must also be carefully examined when trust is concerned. A little background check and public perception can serve as useful starting point. How long has the institution or individual operated as a broker and how has their past performance looked like? Although historical performance may not guarantee future prospects, they still serve as useful measures when dealing with brokers. Undoubtedly, there exist a few good brokers who have not operated in the industry for so long. Nothing therefore prevents investors to give them a try. However, it is important to do so in a cautious approach. For instance, one may start dealing with new investment brokers by testing their services on a small scale. That is, by initially investing smaller amounts with them and increasing their investment in a gradual manner as they keep building trust. It’s like taking a bath with hot water of unknown temperature. You don’t pour the hot water on yourself right away. You cautiously test it, probably by dipping your finger slightly in it. A key factor of equal consideration, while looking at investment brokers’ reputation, is whether they are licensed or not. You have worked hard for your money and surely deserve to keep it safe from fraudsters. It is worth to note that the potential for fraud lessens when dealing with licensed brokers. The Ghana Stock Exchange provide details of all licensed brokers where you can do some background check on their date of incorporation, key personalities etc. The Security and Exchange Commission (SEC) similarly publish names of licensed mutual funds.

Furthermore, it is essential for existing clients to pay attention to details such as data accuracies in their transactions. A couple of weeks ago, I happened to bump into the Facebook page of an investment management firm. While going through people’s comments and reviews, I came across one that specifically advised colleagues to regularly check on their accounts to ensure accurate details. The person was commenting on grounds that some deposits he made some time ago did not reflect in his account until he followed up with the investment firm. In fact, I couldn’t stop grinning after going through his review. This is because I have particularly witnessed, on some occasions, similar errors made by my investment broker. On two separate occasions, they misplaced my purchasing order form for stocks. Realising unusual delay in the purchasing of stocks I had requested for, I had to follow up. Surprisingly, they couldn’t locate my completed forms so I had to pick another form and start over. This definitely led to further delay in the stocks purchase. On another occasion, they mistakenly purchased a different company’s stock instead of the one I had ordered for. There was this day too when a deposit I made into my equity fund account rather ended up in my money market fund account (managed by the same broker). Imagine if this had found its way in a third party’s account. I also recall one painful experience whereby an investment firm issued me a closed account number for telex (electronic) transfer.

As you can see, such carelessness and poor data records may translate into grave consequences in the management of clients’ investment. If they could lose my purchase order forms, mistakenly purchase a different company’s stock instead of the one I requested for, issue me a deactivated account number for telex transfer, what is the guarantee that they cannot commit similar critical mistakes in the management of our funds. Mind you, this was even one of the oldest and respectable brokerage firms in the country. How much more the ‘baby-toothed’ ones?

The bottom line is that, investment brokers and advisors can be professionals as far as investment services are concerned. However, instead of sitting back and leaving everything in their hands, you can play an active role to ensure that your investment stay on track. In other words, never leave your investment on autopilot, trusting the experts to always do things right. In addition, avoid falling prey to brokers’ personal interests. Personally take interest to access and compare investment options of different firms and then choose the ones that align with your interests. Finally, you should periodically monitor your investment transactions and balances. If you don’t have access to online services, you may request or physically go to their offices for your account statements on a regular basis.

Get to know your mutual funds: SAS Fortune fund

SAS fortune fund

Our first post on the ‘Get to know your mutual funds’ series started with Epack investment fund, where we highlighted aspects such as the nature, investment strategy and performance of the fund. To continue the series, let’s have a look at SAS Fortune fund. Continue reading “Get to know your mutual funds: SAS Fortune fund”

4 DUMB financial decisions I had made in the past

dumb financial decisions

Just about three months ago, I wrote on four smart financial decisions I had made in the past. As humans, we also make mistakes in some aspects of our lives, which include finances too. In the previous post, I mentioned how useful it was to learn from other people’s mistakes. You may therefore find it worthwhile to go through the following financial mistakes I made in the past, especially if you’re of the younger generation.

  1. Closing my first mutual fund account within just 2 months of opening

dumb financial decision_nokia 2300
Over-excitement propelled me to sell my first fancy phone to fund my first investment account

In reference to the previous post about SMART financial decisions, I made it known that I opened my first investment account in my early twenties, after attending an investment seminar. In fact, over-excitement from the seminar propelled me to sell my then multi-coloured phone to fund the investment account. This was a Nokia (2300) brand phone which I had used for just five months. Due to the strong passion to begin investing, I ignored the fact that I bought the phone for far more than the price I resold it. Imagine buying a phone at GH¢150 (then ¢1,500,000) and then selling it just after five months of usage, for GH¢60 (then ¢600,000). That was exactly what I did. As you can see, this was surely not financially prudent. What made it worse was that the investment account could not last as it should have been. Selling my first fancy phone to fund my first investment account appeared to be easy. However, coping with the ‘phoneless’ life afterwards could not stand the test of time. I couldn’t even wait for three months- I promptly went back to the financial institution for the account’s closure.

Even though it was a good initiative on my side to open an investment account at an early stage, it was also dumb to close the said account just after two months of opening. By now, you may be aware of the cost implications of closing an investment account prematurely. First, the investment fund (an equity mutual fund) had made losses during the two-month period I stayed invested. Hence, the GH¢60 invested had significantly reduced in value to my disappointment. In addition, I was charged 3% of the remaining amount as early withdrawal fee (which I was not made aware of during the account opening). As if what I went through was not enough, I further topped up the retrieved money with additional fund sourced from my SSNIT (students’) loan instalment to purchase another fancy phone. This was Nokia 6610i, bought for GH¢200 (then ¢2,000,000). Imagine what GH¢200 could do if invested in 2006. Certainly, this was a clear example of opportunity cost [the profit I could have gained from investing the GH¢200 but gave up and rather chose to spend the GH¢200 on a luxury phone].

  1. Not diversifying my investment portfolio sufficiently

dumb financial decisions _diversificationBack in the olden days, I would be staying glued to the television set on Saturday evenings awaiting the NLA (National Lottery Authority) lottery draw on GTV. Just like other kids at the time, the only means to be part of the lottery game was to randomly pick 5 out of the 90 numbers to be drawn and watch if any of them would stand a chance of being drawn. Imagine staking 5 out of 90 lotto numbers. The chances of winning are definitely less as compared to staking many numbers such as 10, 20, or even 30 out of the 90 lotto numbers. Realising how difficult it was to get any of my selected numbers being drawn, I henceforth decided to go beyond five numbers. I quite remember writing down at least 10 different numbers just to increase my chances of ‘wining’ and indeed, I did ‘win’ on many occasions 🙂

I’m sure by now you’re wondering what lotto numbers has got to do with investment diversification. Now, let’s take a look at the Ghana Stock Exchange. Imagine owning stocks in just a couple of the 40 listed companies and regularly sitting close to your computer screen to monitor stock prices on the market. You would realise that your chances of having your stocks being among the gaining list are very less. The situation is different when you own stocks of several listed companies instead of few ones. That is the relationship I’m trying to draw between the lotto numbers and investment (stocks) diversification. During my early stage of investing, my investment picks were confined to few products, in particular stocks. Similar to the lottery story above, I would be staying close to the television watching the GSE updates section of business news. Unfortunately, the few companies from which I owned some stocks were outside the winning team most of the time. Besides that, my portfolio was easily subjected to avoidable shocks and turbulence effects of the stock market in times of bad economy.

See also: My bad experience with a long-term bond: The lessons learnt

  1. Not taking advantage of market falls

dumb financial decisions _market fallsAlthough history shows that stock markets always come out of crisis, we try to shy away from bad markets, either consciously or unconsciously. A number of seasoned investors advise us to take advantage of falling markets. One such key person is Warren Buffet who is noted for the statement that “the key to successful investing is to buy low, [and] sell high”. Nonetheless, the fear to lose one’s investment forces us to do otherwise. This was a similar situation I found myself in- I ignored the opportunities in fallen markets. In fact, I had witnessed the stock market fall a number of times but failed to take advantage of that.

As explained earlier, the lack of diversification exposed my investment portfolio to turbulence effects of the stock market in bad times. This effect could have been minimised or neutralised if I had purchased more of the fallen-priced stocks at the time. One means to mask stocks’ losses is to buy more of the fallen-priced stocks. In doing so, you aim to neutralise the negative effects (losses) posed on the currently owned stocks.


  1. Selling stocks at the wrong time

The lack of proper investment diversification resulted in the sale of stocks during needy circumstances. Surely, selling stocks without making any gain is not worth it. The worse part is that fees and commissions would be paid irrespective of the negative returns. Buying or selling stocks on the GSE attracts a commission of up to 2.5% of the traded amount (This, I never knew at the time though). Thus, within a short period of holding the stocks, a total commission of 5% (for both buying and selling) was paid to the stockbrokers. Even though I sold them to make ends meet, the timing was not right to make some gains. This could have been avoided if I had properly diversified my investment (by including other investment categories such as short-term products). At least, I could have waited for a while so as to make some capital gains.

   Lessons that could be learnt

Failure, they say, becomes a progress when we learn from it. Although I failed to maintain my first investment account, at least, the passion seemed to be still latent. This passion resurrected a few years later when I opened another account which is still active to date. Like the saying goes, ‘don’t let your fall turn to be your downfall’. Furthermore, limit your expenses on luxuries.

Again, don’t be a victim of poor investment diversification. With a well-diversified portfolio, you stand a greater chance of winning many times. Proper diversification is essential for the resistance of shocks on investment portfolio.

Finally, take advantage of market falls. Purchase more of good companies’ stocks when prices go down. In that way, you minimise the negative effects (losses) on currently owned stocks.

Percentage rates of investments: Interpreting them correctly

percentage rates of investments

Percentage rates appear to be popular in many financial publications. We see them in different forms- either positive or negative. As investors, some common areas we find percentage rates interesting are documents that deal with investment returns or profits. Many investors, as well as prospective ones, look out for rates quoted by financial institutions to make informed decisions. Unfortunately, most prospective investors get confused in the interpretation of these rates. Besides the misinterpretation of percentage rates, others naively compare rates associated with different investment categories. Their naivety reflects in the manner they query or make statements such as:

  1. “Which mutual funds have the highest interest rates?”
  2. “Which stocks have high interest rates?”
  3. “The interest rate of Mfund [money market fund] is higher than that of Epack [equity fund]”

One consequence of misinterpreting percentage rates is the disappointment that follows when lower-than-expected returns are made on an investment. During a chat with John (a follower of Sikasεm) a few days ago, I was not surprised when he expressed the frustration he had recently been through. He revealed:

“I nearly cried when 700 cedis in an account yielded only 4.57cedis.”- John Mensah

I understand many more people have had such an experience before. Yes! It is a very painful experience to go through. However, to avoid or reduce the impact of similar painful experiences, it would be worthy to study a few of the percentage rates we usually come across in investment products.


Annual interest rate

The most common investment products that make use of annual interest rates are Treasury bills and fixed deposits. The interest rates quoted on the various Treasury bills and fixed deposits are annually-based. That is, the return or profit earned on these investment products, when utilising the quoted interest rates, is for a period of one year (12 months). However, T-bill investments do not always mature in 12 months. For instance, the 91-day and 182-day T-bills mature after three months and six months respectively. Hence, the calculated interests need to be prorated (distributed) for the actual maturity periods. That is three months and six months for the 91-day and 182-day T-bills respectively.

To be clearer on this, let’s go through the sample calculation below.

     How to calculate Treasury bill interest

Let’s assume that you invest GH¢1000 at the current 91-day T-bill rate of 13.4700%,

Now, since the quoted interest rate (13.4700%) is an annual (12-month) rate, the total interest on the GH¢1000, after 12-months, would have been (1000×0.1347) = GH¢134.7


However, 91-day T-bill investment matures after three months. Hence the above total interest needs to be prorated for a three-month investment period.

Thus, the real interest to be earned on the GH¢1000 would be (1000×0.1347)/4 = GH¢33.675

Note that 3 months × 4 = 1 year. That is why you see the total (annual) interest being divided by 4

In a similar manner, the annual interest would have been divided by 2 if it were to be 182-day (6 months) T-bill investment.


Another means to estimate your T-bill or fixed deposit interest is to first distribute the calculated annual interest per each month and further multiply the monthly interest by the actual number of months the money stayed invested.  Using the same example above, the interest earned per month would be (1000×0.1347)/12 = GH¢11.225 Remember that there are 12 months per annum (year).

Now, since the money is being invested for 3 months (91-day T-bill), we multiply the monthly interest figure by 3. That is, (GH¢11.225×3) = GH¢33.675


Annual yield

Annual yield is the annual rate of return on an investment, taking into consideration the compounding effect of any intermediary interest earned. Annual yield is most often reported as the investment return on money market funds (a pool of fund invested in fixed income products). Managers of money market funds, while estimating the annual yield, assume that the funds would remain intact in the account for one year (365 days). For instance, the estimated annual yield of HFC Unit Trust on 10th May 2017 was reported as 20.31%. What this means is that assuming the funds in HFC Unit Trust remain intact from 10th May 2017 to 10th May 2018 (one year), the estimated rate of return would be 20.31%. That is, the value of the mutual fund would appreciate by 20.31%. However, since investors continue to deposit and withdraw from mutual funds, the funds are therefore not expected to remain intact throughout the full year. Thus, fund managers keep revising their annual yield on a daily basis to reflect the changes. For this reason, it may be difficult to precisely calculate the return on a mutual fund (money market) investment over a period.

Due to the effect of compounding, investment returns associated with money market funds may not be evenly distributed over the investment duration. Let’s assume that you had invested GH¢1000 in Databank’s Mfund on 12th May 2017. Annual yield of Mfund on 12th May 2017 was 19.88%. Thus, the estimated return (profit) on the GH¢1000 after one year would be (GH¢1000×0.1988) = GH¢198.8 However, the GH¢198.8 takes into account the compounding effects of intermediary profits that are reinvested by the fund managers. As such, it cannot be equally distributed by each of the 12 months. This implies that if the GH¢1000 stays invested for just six months instead of the 12 months, you cannot expect to earn half of the annual profit.

Once again, let’s go through another example using real historical data.


Table: Historical investment value of an Mfund account

Date Mfund value, GH¢ Monthly return, GH¢
30/09/2016 879.41 —–
31/10/2016 894.71 15.3
30/11/2016 912.03 17.32
31/12/2016 928.61 16.58
31/01/2017 945.83 17.22
28/02/2017 958.98 13.15
31/03/2017 971.49 12.51
30/04/2017 988.82 17.33


The table above shows the value of an Mfund investment account (a money market fund) over a seven-month period. Based on the investment values, the monthly returns are also calculated by subtracting preceding values from current ones.

Even though the fund manager (Databank) had estimated an annual yield of about 23% at the time, the returns (as seen in the table) were not equally distributed over the period- They differed from one month to another. For instance, November return of GH¢17.32 had increased from the October return of GH¢15.3. On the other hand, the return in January (GH¢17.22) had dropped to GH¢13.15 in February. Factors that account for non-equal distribution of Mfund returns include, but not limited to, compounding effect of intermediary profits as well as changes in interest rates of fixed income products during the investment period.


Year to date return (YTD)

Whenever we mention year to date, we refer to the period between the start of a calendar year and the present date of the same year. The beginning of the calendar year often has 1st January as the baseline. Year to date return therefore refers to the return or profit made so far, from 1st January to the present day of the calendar year. For instance, a year to date investment return of 10%, as of 30th April 2017, implies that from 1st January to 30th April 2017, a return of 10% had been made on the investment.

Year to date returns are usually reported on equity-related investment products such as the Ghana Stock Exchange (GSE), Epack investment fund, SAS fortune fund and HFC Equity Trust. Similar to the annual yield explained earlier, year to date returns can drop or increase from time to time within a calendar year. Again, year to date returns do not accumulate in a linear functional manner. In other words, they do not distribute proportionally along the calendar year. The mere fact that a year to date return after the first four months (30th April) was 10% does not necessarily mean that the return at the end of the year (31st December) would be 30%. This is due to price fluctuations on the equity markets. On every business day, equity fund managers recalculate their year to date returns based on the present prices of stocks.

It is also important to note that published YTD returns mostly affect existing shareholders than prospective ones. Now let’s have a look at the scenario below:

percentage rates of investments_scenario

From the scenario above, it is clear that the investor lacked understanding of YTD returns. This is a common mistake many prospective investors make when investing in equity funds. As I mentioned before, YTD returns mostly affect existing shareholders. Thus, the 45% the prospective investor noticed in September 2016 was a profit that had been ‘earned’ already by the existing shareholders of the equity fund. To accurately estimate his return, he needed to do that in reference to September 2016 since that was when he made the deposit. According to the scenario, the fund had lost 5% (45% to 40%) from September to December. Hence, the investor had actually lost part of his deposit.

In a similar situation, an existing shareholder who topped up his account in September 2016 would not enjoy profit on the additional deposit that was made in September. Nevertheless, he would enjoy the 40% return on his previous investment (prior to the deposit in September) if that investment had stayed in the equity fund from January to December 2016.


Comparing percentage rates

It is important not to compare percentage rates of different categorical investments. For example, the annual yield of HFC unit trust (a money market fund) as of 10th May 2017 was 20.31%. On the same day, the year to date return on HFC equity trust (an equity mutual fund) was 9.68%. It would be a big mistake to compare these two percentage rates and assume that HFC unit trust performs better than HFC equity trust. This is because the 9.68% return on HFC equity trust is only for the period of 1st January 2017 to 10th May 2017 while the 20.31% on HFC unit trust is a 12-month estimated rate.

On another note, it may not be appropriate to compare the year to date (YTD) returns of two different equity funds in the early part of a year. As stated earlier, YTD returns do not distribute proportionally along the calendar year. For instance, the YTD returns of SAS fortune fund and Epack investment fund, as of 11th May 2017, were 14.51% and 5.4% respectively. While the rate for SAS fortune fund is higher than that of Epack, it may be premature to conclude that SAS fortune fund performs better than Epack investment fund. This is because the YTD return of SAS fortune fund may drop while that of Epack can rise steeply before the year ends. Thus, a more appropriate comparison could be done at the end of the calendar year.

Profit of CAL Bank drops after previous performances

cal bank

After recording impressive performances at a time that some banks are struggling in the last three years, CAL Bank has recorded over a ninety percent drop in profits for 2016.

According to the 2016 financial results of CAL bank, its profit dropped from 160 million cedis in 2015 to 7.2 million cedis in 2016.

This was largely due to the high provision for impairments which amounted to almost 200 million cedis.

Although the bank is among banks affected by the huge energy sector debts, its profits increased by over 50 percent and 14 percent in 2014 and 2015 respectively.

The profit for 2015 recorded GH¢160,042,000 compared to GH¢ 140,352,000 in 2014.

Also, the 2014 profits of GH¢ 140,352,000 represented a 52.6% increase from the GH¢92,010,000 in 2013.

Total income for 2016 amounted to 357.4 million cedis from 388.4 million cedis the previous year.

Overview of 2016 performance

With the exception of the interest income that made some gains in 2016, the bank’s net fees and commissions, net trading income as well as other operating income such as corporate finance and advisory services all recorded a drop between 2015 and 2016.

Total operating expenses increased by over ninety-seven percent between 2015 and 2016.

The expenditure increased from 175.2 million cedis to 345.3 million cedis for the period.

This was also largely accounted for by the provision for impairment on financial asset of 199.2 million cedis from 35.6 million cedis the previous year.

Meanwhile CAL bank increased total assets under management from 3.35 billion cedis to 3.59 billion cedis between 2015 and 2016.

Its liabilities also increased from 2.84 billion cedis to 3.09 billion cedis in 2016.

See also: 4 financial stocks you may consider buying

MD hopeful of turnaround

Explaining CAL Bank’s 2016 performance, its Managing Director Frank Adu told Citi Business News he is confident of a turnaround with the repayment of debts owed in the energy sector.

“I think while shareholders were not happy about the fact that they were not going to receive dividends, they are also smart; they understand that you are also cleaning up the mess and that it is better to be prudent and protect the balance sheet than to go and pay dividends when you are not in the position to do so,” he stated.

“You are in a business where the bank has been entrusted to you to grow it. All financial institutions which gallop fail; you do not sell money the way you sell other commodities; it’s risky so you take your time,” he added.

Shareholders could not receive any dividends this time round. At the close of trading on Tuesday, 2nd May, CAL Bank’s share price was 69 pesewas.


Credit: citibusinessnews

Companies that have declared their 2016 dividends so far

2016 dividends

Over the past two months, a number of listed companies on the Ghana Stock Exchange continue to declare their 2016 dividends to the general public. While others are yet to publish theirs, there is however a few companies that have decided to pay no dividends for the 2016 financial year, mainly due to a drop in their 2016 profits. Among the companies paying no dividends for the 2016 financial year include Tullow Oil Plc (TLW), CAL Bank Limited (CAL), Fanmilk Limited (FML) and Guinness Ghana Breweries Limited (GGBL).

Meanwhile, in the table below, you will find details of the 2016 dividends declared by some listed companies so far.

Company Dividend published date Dividend/share 1Ex-dividend date Dividend payment date
Standard Chartered Bank Ghana Ltd. (SCB) 26th April 2017 GH¢1.12 31st May, 2017 30th June, 2017
Ghana Oil Company Ltd. (GOIL) 25th April 2017 GH¢0.025 16th May, 2017 19th June, 2017
Unilever Ghana Ltd. (UNIL) 24th April 2017 GH¢0.05 8th May, 2017 24th June, 2017
Trust Bank (Gambia) Ltd. (TBL) 24th April 2017 2D 0.30 9th May, 2017 18th May, 2017
Ecobank Ghana Ltd. (EGH) 10th April 2017 GH¢0.82 19th April, 2017 26th May, 2017
Ghana Commercial Bank (GCB) 18th April 2017 GH¢0.38 10th May, 2017 19th June, 2017
Societe Generale Ghana Ltd.  (SOGEGH) 7th March, 2017 GH¢0.033 27th March, 2017 12th May, 2017
Starwin Products Ltd.(SPL) 10th January, 2017 3GH¢0.001 27th January, 2017 28th February, 2017
Anglogold Ashanti (AGA) 15th March, 2017 GH¢0.3634 Not available 10th April, 2017
Anglogold Ashanti Depository 15th March, 2017 GH¢0.003634 Not available 10th April, 2017


1Investors must buy stocks, at least, one business day before the ex-dividend date in order to qualify for the declared dividend.

2Dalasi (D) is currency of the Gambia. Current exchange rate for today, 1st May 2017 (subject to change) is USD1:D46.00

3 Dividend declared by Starwin Products Ltd. (SPL) is for an interim period (not the full financial year).

Get to know your mutual funds: Epack investment fund

Databank Epack investment

In my post about ‘best’ investment product in Ghana, I mentioned how important it is to know the company managing your investment, their experience and the kind of businesses they invest clients’ money in. In reference to this, I deem it necessary that we expand our knowledge on the common mutual funds in Ghana. To begin with, let’s consider Epack investment fund.

Brief background of Epack investment fund

Epack started as an investment club in October 1996 by five individual investors- Evelyn Walter-Ofei, Phyllis Clottey, Angelina Ammah, Caroline Awere and Kingsley Bentum. Using the initials of their first names, they formed the acronym EPACK. That is:






In 1998, the fund was incorporated to take over from the investment club. Epack is recognised as the first mutual fund in Ghana. It is managed by Databank Asset Management Services Limited (DAMSL). Started with an initial capital of GH¢25 (then 25,000 old cedis) in October 1996, Epack’s total assets, as of 30th December 2016, had grown into GH¢ 124.845 million (according to Databank’s fact sheet). Epack is an equity fund, which is meant for investors who seek high potential growth over the long term.

Nature of Epack investment fund

Epack is an open-ended mutual fund. As an open-ended fund (as opposed to closed-ended fund), Epack has no limitation to the number of shares (units) it can issue to clients. When investors purchase additional shares by depositing money in their mutual fund accounts, more shares are subsequently created. Thus, one can buy as many Epack shares as possible, with no limitation. As stated earlier, Epack is a long-term equity fund. It therefore invests mainly in equities (stocks). Epack is however not listed on the stock exchange.

Investment strategy of Epack investment fund

Majority of the fund’s money is invested in stocks on the Ghana Stock Exchange. As of 31st December 2015, Epack’s top five holdings on the Ghanaian market were Enterprise Group Ltd, Standard Chartered Bank Ghana Ltd, GCB Bank Ltd, Fan Milk Ltd and Total Petroleum Ghana Ltd. However, Epack also invest in other African stock markets. These include Egypt, Kenya, Malawi, Mauritius, Nigeria, South Africa, Tanzania, Ivory Coast and Uganda. For instance, according to the 2015 annual report of Epack investment fund, the fund had invested 4.18% of its portfolio in Sonatel SN (Senegal), 3.90% in Equity Group (Kenya), 3.73% in Tanzania Breweries Ltd (Tanzania), 3.63% in QNB Alahli (Egypt), and 3.39% in CRDB Bank (Tanzania). These equities were even listed in the fund’s top 10 holdings. What this means is that Epack’s performance does not therefore depend solely on the Ghana Stock Exchange. In other words, the performance of Epack may not always reflect that of the Ghana Stock Exchange. Even though the Ghana Stock Exchange may be doing well in a particular year, any poor performance of the other African markets can negate the overall performance of Epack investment fund. On the other hand, a poor performance of the Ghanaian equity market may not significantly affect Epack’s return as long as its investments in the other African markets are doing well. The chart below depicts the portfolio allocation (country wise) of Epack investment fund as of 31st December 2015.

Epack investment country allocation. 2015 annual report
Country allocation of Epack investment fund as of 31/12/15
Source: Epack’s 2015 annual report

Apart from the stock markets, Epack further invest in unlisted equities (ie. shares of companies which are not traded on the stock market). Epack invest in varying organisational sectors. Their investment portfolio includes the financial sector, consumer staples, communications, energy, and conglomerate.

Epack also invest in other collective investment schemes. For instance, according its 2015 annual report, the fund had invested part of its portfolio in Databank money market fund, Stanbic Cash Trust and Stanbic Income Fund Trust.

Performance of Epack investment fund

As earlier explained, Epack is an open-ended fund. Generally, open-ended funds do not trade on the stock exchange. Therefore, you cannot monitor the performance of Epack on the Ghana Stock Exchange like you have been monitoring other company stocks. Nevertheless, the fund manager, Databank, reprice the fund at the end of each trading day based on the fund’s net asset value.  The fund’s annual return is also published at the end of every year. Epack has had its ups and downs. Its best performance in the last decade (2007-2016) is 83.95%, which was posted in 2013. On the other hand, its worst performance in the last decade is -12.21%, recorded in 2011. Over the same period, Epack has recorded four downward (negative) returns and six upward (positive) returns. In the table below, you will find the performance trend of Epack investment fund since inception.


Performance trend of Epack Investment fund

Year Epack return, %
1996 -2.00
1997 82.00
1998 123.00
1999 -3.00
2000 20.00
2001 50.81
2002 69.90
2003 137.00
2004 60.75
2005 -4.35
2006 32.22
2007 51.00
2008 -3.68
2009 -5.11
2010 33.36
2011 -12.21
2012 17.37
2013 83.95
2014 39.58
2015 0.65
2016 -3.44

For performance comparison of Epack and other investment funds, refer to this link.

Epack’s awards

Epack investment fund is accorded with the following awards:

  • Equity Fund of the Year, 2014 (Ghana Investment Awards)
  • Investment Fund of the Year, 2014 plus Hall of Fame Inductee (Made in Ghana Awards)
  • Equity Fund of the Year, 2015 (Ghana Investment Awards)
  • Portfolio Manager of the Year, 2014 – Mr. Nii Ampa-Sowa, Epack’s Portfolio Manager, (Ghana Investment Awards)
  • Portfolio Manager of the Year, 2014 – Mr. Nii Ampa-Sowa, Epack’s Portfolio Manager, (Ghana Investment Awards)

Investing in Epack

Epack investment fund is opened to the public. One must be at least 18 years in order to directly open an account. Nevertheless, persons below 18 years can still open an Epack account via their parents or guardians. The parent or guardian opens the account in trust for the child and invest on his behalf. One can open an account with a minimum lump sum of GH¢50. This can be further topped up at any time. There is also the option of a regular investment plan which can be started with a minimum monthly contribution of GH¢10. Accounts can be opened through Databank Asset Management Services Ltd., the organisation managing Epack. Currently, Databank main branches are in Accra (headquarters), Tema, Kumasi and Takoradi. Besides these, they also partner with selected GTBank branches within Accra, Ashaiman, Cape Coast, Tarkwa and Tamale. Clients who stay invested in Epack for a minimum of three years pay no fees or commissions. However, any withdrawal made before three years attracts a fee of 1-3% of the withdrawal amount. For details on investment fees and commissions, refer to this link.

Stock analysts predict buoyant performance on GSE

stock analysts predict performance on gse

Stock analysts are confident trading activities will bounce back in the second quarter following a pickup in trading activities on the local bourse. The 2017 first quarter performance indicate that the stock market gained about 10 percent growth compared to the negative 4.26 percent recorded in the same period last year.

While investors of GCB Bank gained 1 cedi 64 pesewas to record the highest gains in the first quarter of this year, investors of CAL Bank were the highest losers as their stocks dropped almost 35 percent in the first quarter of this year.

With about 46 percent increase in price, GCB Bank topped the gainers for the first quarter. It was closely followed by Benso Oil Palm Plantation and StanChart which recorded 39.42 and 26.85 percent respectively.

Also, the share prices of Ecobank Ghana, Total Petroleum and Unilever Ghana Limited increased by 14.06, 11.11 and 5.76 percent respectively. With the exception of Unilever Ghana Limited, all the gainers for this year’s first quarter ended 2016 with losses on their share prices.

Also, of the top five gainers, only Benso Oil Palm and Unilever Ghana Limited recorded some gains in the same period last year.

An Associate Equity Trader at UMB Stockbrokers, Kofi Busia Kyei, explains to Citi Business News the reasons accounting for the performances of the listed companies that gained in the first quarter of 2017.

Investors were taking positions quickly ahead of the expectations of the new regime. They were expecting interest rates and inflation to drop…GCB has been resilient over the years, it gained about 22.1 percent in profits…generally, the bank has been a very good company,” he said.

But investors of CAL Bank recorded the highest loss on their share prices. The banking stock declined as much as 34.67 percent. It was preceded by Tullow Oil and Produce Buying Company with -22.60 and -16.67 percent respectively. Also, Guinness Ghana Limited, SIC Insurance and Enterprise Group recorded losses of 7.98, 1.52 and 0.42 percent respectively.

Kofi Busia Kyei further explains reasons accounting for their poor performances:

Basically CAL Bank’s profits were down over the period, down by over one hundred percent comparing 2016 and 2015…their cash also went down by 80 percent; investors also look out for these indicators before making decisions.

Meanwhile, the share prices of the remaining stocks such as HFC Bank, Ecobank Transnational Incorporated, Goil, ADB, UT Bank, Ayrton and Access Bank, remained unchanged.

The stock analysts are highly optimistic of the second quarter of 2017. They cite the new pro-business policies by the government and recent trends in interest rates as basis for their claim.

Also, the Managing Director of the Ghana Stock Exchange, Kofi Yamoah, tells Citi Business News he is hopeful the market will pick up despite a bullish performance in 2015 and 2016.



Performance of stocks on the Ghana Stock Exchange

performance of stocks

Investing in stocks is proven to be one of the most lucrative means of building wealth. Stocks may be either listed or unlisted. Unlisted stocks (also known as over-the-counter stocks) are stocks that are not traded on a stock exchange but directly between two parties in a non-standardised form. Listed stocks, on the other hand, are stocks traded on a regulated market or exchange such as the Ghana Stock Exchange. There are currently about 40 listed stocks on the Ghana Stock Exchange. These are made up of various industrial sectors such as banking, insurance, manufacturing, mining, and petroleum. Usually, the performance of stocks on the Ghana Stock Exchange is captured by the ‘GSE all-share index’. The GSE all-share index, which can further be represented in a percentage format  (GSE return), reflects the overall performance of all listed stocks on the exchange. Refer to this link for all historical GSE returns (from inception to date).

Besides the GSE all-share index, the performance of stocks can also be measured for each individual stock. The most common means of doing this is by computing the return on the stock based on its share price appreciation (or depreciation) over a period. For instance, if a stock starts trading at the beginning of the year at GH¢2 and closes at the end of the same year at GH¢3, the said stock would be making an annual return of 50%. That is [(3-2)/2] ×100.

In the table below, you will find the historical returns of the various stocks listed on the Ghana Stock Exchange. These figures, covering the past six years, are calculated based on their opening and closing prices for each of the years under study. The average returns for the latest five-year period (2012-2016) are also computed.

See also: Performance comparison of mutual funds in Ghana

Performance of stocks: Historical returns of stocks listed on GSE
2011 2012 2013 2014 2015 2016 Latest 5-year average
1 AngloGold Ashanti Depository shares AADS -16.7 4 0 1.9 -1.9 0 0.8
2 Access Bank Ghana ACCESS N/A N/A N/A N/A N/A N/A N/A
3 African Champion Industries Limited ACI 0 -12.5 -14.3 -66.7 0 -50 -28.7
4 Agricultural Development Bank ADB N/A N/A N/A N/A N/A N/A N/A
5 AngloGold Ashanti Limited AGA 0 8.8 0 0 0 0 1.76
6 Aluworks Limited ALW 8.3 -61.5 0 -60 600 0 95.7
7 Ayrton Drugs Manufacturing Co. Ltd. AYRTN 6.3 5.9 0 5.9 0 -25 -2.6
8 Benso Oil Palm Plantation Limited BOPP 46.7 27.3 129.3 27.7 -38.8 -17.1 25.7
9 CAL Bank Limited CAL -9.4 35.7 162.2 4.1 2 -25.7 34.9
10 Clydestone (Ghana) Limited CLYD -42.9 0 0 -25 0 0 -5
11 Camelot Ghana Limited CMLT -25 16.7 14.3 -25 0 0 1.2
12 Cocoa Processing Company Limited CPC 0 0 0 0 0 0 0
13 Ecobank Ghana Limited EGH (Formally EBG) 6.3 -6.3 87 35.5 -7.6 -8.6 20
14 Enterprise Group Limited EGL -24 26.3 291.7 -6.9 37.1 0 69.6
15 Ecobank Transnational Incorporated ETI -21.4 20 58.3 47.4 -3.6 -63 11.8
16 Fan Milk Limited FML -3.3 50.4 86.5 -20.7 40 51.7 41.6
17 GCB Bank Limited GCB -31.5 13.5 131 13.4 -34.9 -6.1 23.4
18 Guinness Ghana Breweries Limited GGBL -1.9 71.2 136.6 -48.4 -37.8 -18.1 20.7
19 NewGold Issuer Limited GLD N/A N/A -18.8 37 8.9 -0.5 N/A
20 Ghana Oil Company Limited GOIL 10.3 93.8 43.5 19.1 33.3 -21.4 33.7
21 Golden Star Resources Limited GSR -47.1 0 0 -14.9 -15 -2 -6.4
22 Golden Web Limited GWEB -20 0 0 -25 -66.7 0 -18.3
23 HFC Bank (Ghana) Limited HFC 2.3 0 113.3 68.4 -43.8 -15.6 24.5
24 Mega African Capital Limited MAC N/A N/A N/A N/A 33.3 0 N/A
25 Mechanical Lloyd Company Limited MLC 10 36.4 153.3 -26.3 -32.1 -21.1 22.0
26 Produce Buying Company Limited PBC 92.3 -28 -5.6 -29.4 -16.7 -40 -23.9
27 Pioneer Kitchenware Limited PKL -14.3 0 0 0 -16.7 0 -3.3
28 PZ Cussons Ghana Limited PZC N/A -25 338.9 -62 13.3 -35.3 46.0
29 Standard Chartered Bank (GH) Ltd. SCB 0.7 -74.7 29.9 36.2 -19.9 -25.2 -10.7
30 Standard Chartered Bank (GH) Ltd. (Prefrence shares) SCB PREF 0 0 0 5.8 29.1 5.6 8.1
31 Societe Generale Ghana Limited SOGEGH (Formally SG-SSB) -28.1 2.1 56.3 33.3 -20 -22.5 9.8
32 SIC Insurance Company Limited SIC -7 -15 14.7 -5.1 -62.2 -14.3 -16.4
33 Starwin Products Limited SPL -40 66.7 -20 -50 100 -25 14.3
34 Sam Woode Limited SWL 0 0 50 33.3 0 0 16.7
35 Trust Bank (Gambia) Limited TBL -69.9 0 -12.5 -31.4 54.2 -29.7 -3.9
36 Tullow Oil Plc TLW N/A 22.7 -8.1 0 -6 -18.3 -1.9
37 Total Petroleum Ghana Limited TOTAL 98.3 18.5 N/A 20.6 -16.4 -61.2 N/A
38 Transol Solutions Ghana Limited TRANSOL -28.6 -20 -25 0 0 0 -9
39 Unilever Ghana Limited UNIL 16.7 28.3 114.9 -41.6 -20.6 0.1 16.2
40 UT Bank Ghana Limited UTB 14.3 18.8 18.4 -44.4 -60 -70 -27.4

*N/A: Not available, mainly because the company was not listed on the stock market by then

Performance of stocks: Brief observations

According to the data above, the performance of stocks for most listed companies has not been encouraging over the six-year period. For instance, African Champion Industries Limited (ACI), Clydestone Ghana Limited (CLYD), Golden Star Resources Limited (GSR), Golden Web Limited (GWEB), and Transol Solutions Ghana Limited (TRANSOL) never recorded a single positive return throughout the period. Moreover, their latest 5-year average returns were -28.7%, -5%, -6.4%, -18.3% and –9% respectively.

Another key observation from the data has to do with stock volatility. Even though some stocks depict impressive average returns for the latest five-year period, the trend of their annual returns appears to be erratic. A typical example is Aluworks Limited. According to the data, Aluworks’ 5-year average return (95.7%) was contributed by the sole remarkable return (600%) it recorded in 2015. PZ Cussons similarly posted a 5-year average return of 46% which was mainly due to the 338.9% it recorded in 2013.

On the other hand, some listed companies have been consistent in good shape over the six-year period. A few of these stocks, according to the data, include Benso Oil Palm Plantation Limited (BOPP), Ghana Oil Company Limited (GOIL) and Fan Milk Limited (FML). BOPP recorded negative returns for two years (2015 & 2016) and positive returns for the rest of the four years. It further posted a 5-year average return of 25.7%. Similarly, Fan Milk Ltd recorded negative returns in 2011 and 2014, positive returns for the rest of the four years and a splendid 5-year average return of 41.6%. GOIL recorded only one negative return in 2016, with a 5-year average return of 33.7%.

In terms of industrial sectors, the banking and finance stocks seem to perform better than stocks of other sectors. A few studies show that the well-being of an organisation’s industrial sector may impact the performance of its stock. It is due to this reason why investors are advised to invest in industries they are familiar with. Thus, it may be beneficial to look further and compare the performance of stocks according to their industrial sectors. Refer to this link for the historical returns of stocks categorised by their various industrial sectors.

It is essential to note that stocks’ returns based on their price appreciation alone may not constitute their total performance. This is because other factors such as dividend payments and any bonus shares issued by the companies can also be considered. In spite of this, stocks’ returns play key role in terms of their performance rating. At least, we know that the rate of dividend payments by most companies is fairly low as compared to returns on stocks.

Furthermore, one must be cautious when utilising historical results for any financial decision. Although many financial analysts depend much on historical performance of stocks, a few veteran investors caution on such practices. For instance, Warren Buffet once argued that:

If past history was all there was to the game, the richest people would be librarians.”

In a nutshell, even though historical results may not guarantee the future performance of stocks, they may still aid investors to have a clear picture of what is happening on the stock market.

Databank introduce mobile money top-up option for its clients

Databank mobile money top-up

Databank financial service has introduced a mobile money top-up option for its investment clients. The service, recently launched, allow clients to conveniently top up their various mutual fund accounts with their mobile handsets. The mobile money top-up service is available on all networks and can be used to top up the following mutual funds: Epack, Mfund, Bfund, Arkfund and Edifund. Clients using MTN network can avail the service via MTN mobile money. Similarly, clients on Tigo, Airtel, and Vodafone can use the service through Tigo cash, Airtel money and Vodafone cash respectively. To register and start depositing with the service, one can follow the procedures given below:

See also: Ecobank introduce Treasury bills via mobile phones

Databank mobile money registration procedure

  1. Dial the USSD code *713*100# to access the platform.

Databank mobile money top-up step 1

2. Select ‘1’ from the drop down list and press ‘send

Databank mobile money top-up step 2

3. Enter your Databank mutual fund account number and press ‘send

Databank mobile money top-up step 3

4. Select ‘1’ to confirm your account name and then press ‘send’. Select ‘0’ or ‘CANCEL’ to exit if the name on the screen is not yours. Dial *713*100 to restart in this situation.

Databank mobile money top-up step 4

5. Select ‘1’ to register another mutual fund account number (if you have multiple accounts). Select ‘2’ to begin depositing money into your mutual fund account. Press ‘SEND’ to continue.

Databank mobile money top-up step 5

Databank mobile money top-up procedure

1. Dial the USSD code *713*100# to access the platform.

Databank mobile money top-up step 6

2. Select ‘2’ from the drop down list and press ‘send

Databank mobile money top-up step 7

3. Enter your Databank mutual fund account number and press ‘send

Databank mobile money top-up step 8

4. Select the fund you wish to invest in. For example, selecting ‘2’ will top up Jon’s Epack account (see the snapshot below). Press ‘SEND’ to proceed.

Databank mobile money top-up step 8

5. Enter the amount you wish to invest and press ‘SEND

Databank mobile money top-up step 9

6. A pop up message will appear, letting you know that your request is being processed

Databank mobile money top-up step 10

7. Enter your mobile money PIN to authorise payment from your mobile money wallet. Press ‘1’ to approve the transaction.

Databank mobile money top-up step 11

8. A confirmation SMS will be sent to your phone. The SMS will further display the balance in your mobile money wallet.

Databank mobile money top-up step 12