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:

EEvelyn

PPhyllis

AAngelina

CCaroline

KKingsley

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.

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