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.
Brief background of SAS Fortune fund
Founded in June 2004, SAS Fortune fund is noted as one of the earliest investment funds in the country. The fund is managed by Strategic African Securities Investment Management Ltd., a subsidiary of SAS Finance Group. The total net asset value of SAS Fortune fund stood at GH¢2,971,909 at the end of 2015, according to its 2015 annual report.
Nature of SAS Fortune fund
SAS Fortune fund is an open-ended mutual fund. In the previous post, we explained that managers of open-ended funds have the freedom to create and issue new additional shares to their clients (shareholders). The fund is targeted at individuals and groups seeking medium to long-term capital growth. The fund manager, SAS Investment Management Ltd., therefore invest in a diversified portfolio of both listed and unlisted equities to achieve its long-term goal.
Investment strategy of SAS Fortune fund
SAS Fortune fund invest completely in Ghana, with investment allocation of about 80% equities and 20% fixed income and short-term products. Investment portion in fixed income instruments is to primarily improve liquidity of the fund. As of 31st December 2015, SAS Fortune fund had invested in fixed income instruments such as fixed deposits of the following financial institutions: Beige Capital, Liberty Mngt. Ltd. and Omega Capital. Their allocation of investment products slightly varies from time to time owing to many factors. Such factors include, but not limited to, growth (or decline) in the equity market and increase (or decrease) in interest rates of the fixed income market. For example, at the end of 2014, total equity of the fund constituted 80.16% of its net assets while fixed income and short-term investment constituted 19.84%. However, this proportion slightly changed exactly a year afterwards. The fund by then had 73.35% and 24.65% of its net assets in equities and fixed income products respectively.
A look at the 2015 annual report of SAS Fortune fund shows that the fund invested in only 14 out of the about 35 companies listed on the Ghana Stock Exchange at the time. In the same period, the fund’s top five equity holdings were Ghana Commercial Bank Ltd. (constituting 17.79% of its net assets), Ecobank Ghana Ltd. (constituting 14.29% of its net assets), Fan Milk Ltd. (constituting 10.75% of its net assets), Ghana Oil Company Limited (constituting 8.79% of its net assets) and Standard Chartered Bank Ghana Ltd. (constituting 8.28% of its net assets).
SAS Fortune fund invest a huge portion of its allocation in the banking sector. For instance, as of 31st December 2015, the fund had 45.15% of its net assets in the banking sector alone. It even had as much as 56.79% of its net assets in the banking sector at the end of 2014. This allocation constituted Ghana Commercial Bank (23.53%), Ecobank Ghana Ltd. (18.72%), Standard Chartered Bank (9.78%), CAL Bank Ltd. (1.93%), SG-SSB Bank (1.85%) and Ecobank Transnational Incorporated (0.98%).
Performance of SAS Fortune fund
The shares of SAS Fortune fund are priced each business day after valuation of its assets is completed by the fund manager (For current prices of SAS Fortune and other mutual funds, click on this link). The annual return of the fund is also published at the end of every financial year.
Since SAS Fortune fund pick its equities solely from the Ghanaian market, the fund’s performance therefore tend to correlate with that of the Ghana Stock Exchange. In other words, any time the GSE post positive returns, the fund similarly post positive returns, although with different percentage figures. On the other hand, the fund perform negatively (most of the time) whenever the Ghanaian stock market post negative results. In fact, the only year when annual returns of SAS Fortune fund and the Ghana Stock Exchange went in opposite direction was 2016. The fund, in 2016, recorded 5.29% whereas the Ghana Stock Exchange posted -15.33%.
Over the entire period (13 years) the fund started operating, it has recorded nine positive returns (profits) and four negative returns (losses). The fund’s best performance since inception is 89.2%, recorded in 2013. On the other hand, its worst performance within the same period is -22.78% which was recorded in 2009. The table below shows the annual performance trend of SAS Fortune fund since inception, compared with GSE returns over the same period. For performance comparison of SAS Fortune fund and other investment funds, refer to this link.
Performance trend of SAS Fortune fund
|Year||SAS Fortune fund return, %||GSE return, %|
*The fund’s 2004 return reflects half year performance as it was launched in June
(Credit: Compilation of SAS annual returns was partly contributed by ARG)
SAS Fortune fund’s awards
SAS Fortune fund was recognised as the 1st runner-up equity fund of the year at the 2014 Ghana Investment Awards.
Investing in SAS Fortune fund
The minimum number of shares an investor can hold in SAS Fortune fund is 100. Subsequent shares can be purchased subject to a minimum of 50 shares. Accounts can be opened through the fund manager- SAS Investment Management Ltd. SAS Investment Management Ltd. has its main branch in Accra. They also collaborate with National Investment Bank (NIB), who collect clients’ deposits on their behalf. There is no charge for opening a SAS Fortune fund account. However, an exit fee of between 1% and 3% is charged on the value of clients’ investment if they leave the fund within the first 3 years. For details on investment fees and commissions, refer to this link.