Rates on mutual funds decline due to market losses

mutual funds decline

The poor performance of the stock market seems to be having negative effects on the returns of mutual funds. Until the 6th of September 2017, major mutual funds in the country had been riding on the Ghana Stock Exchange for their continuous gains. This increasing trend ceased to continue following the recent drop in share prices on the stock market. The year-to-date return of the Ghana Stock Exchange, which peaked at 45.53% on 6th September 2017, continuously dropped to 35.67 as of 22nd September 2017. Due to this downward trend, rates on mutual funds decline in response. Major equity and balanced funds have since registered some losses.

The year-to-date return of Databank Epack, for example, has dropped from 35.32% (recorded on 6th September 2017) to 29.37% as of 22nd September 2017. In the same period, Databank’s Bfund dropped from 31.50% to 28.37%. Similarly, SAS Fortune fund (an equity fund managed by Strategic African Securities) declined from 41.20% as of 5th September 2017 to 37.15% on 22nd September 2017.

Other investment funds experiencing decline in their rates include FirstBanc Heritage fund, HFC Equity Trust and Gold Fund Unit Trust. The rate on FirstBanc Heritage fund has slightly declined from 34.89% as of 4th September 2017 to 32.68% on the 22nd of September 2017. Rate on HFC Equity Trust also declined from 26.89% as of 7th September 2017 to 23.72% on 22nd September 2017. Finally, rate on Gold Fund Unit Trust dropped from 34.56% (recorded on 4th September 2017) to 33.60% as of 20th September 2017.

Could these listed companies be classified as foundational stocks?

If you have keenly been following the series on ‘get to know your mutual funds’, you would realise that in each post, the top 5 equity holdings of the fund’s portfolio are highlighted. Interestingly, of the few mutual funds covered so far, there appears to be much similarity in their various top 5 equity holdings. In other words, most of the mutual funds list similar companies as their top 5 equities. Out of curiosity, other mutual funds were also looked into to find out if the similarity trend would remain unchanged. To achieve this, some of the most recent annual reports (where available) of major mutual funds were examined. In all, 19 annual reports were studied, which covered 7 different mutual funds (both equity and balanced funds). The main purpose was to figure out if the topmost equities repeating more frequently in the various mutual funds could be considered as foundational stocks. In doing so, these stocks could become a sort of principal, key or foremost stock picks for investment portfolios. Many would agree, to some extent, that mutual funds are managed professionally by fund managers. Hence, following in the footsteps of these fund managers by replicating some of their top stock picks can be useful.

Why foundational stocks?

Investing in stocks is one of the most proven means to build wealth. However, picking the right stocks from the market can be challenging, especially for the novice investor. One requires a good portfolio mix comprising the right stocks in order to be successful. Just like building a house requires strong foundation to ensure its robustness, building wealth with stocks may equally require careful selection of stocks, in particular, starting with good foundational stocks. A poor foundation can cause your building to tremble or worse, topple down, so do poor foundational stocks can cause to your investment portfolio. Arguably, maintaining strong foundational stocks in your investment portfolio comes with some benefits such as good investment returns. Moreover, strong foundational stocks can somehow protect an investor from the impacts of market falls.

Summary procedure for selecting foundational stocks

As stated earlier, the top 5 equity holdings of seven (7) different mutual funds were compared. The mutual funds were Databank Epack, Databank Bfund, SAS Fortune Fund, HFC Equity trust, HFC Future Plan, CDH Balanced Fund and FirstBanc Heritage Fund. To ensure the use of up-to-date data for decision making, data covering the latest three years (2016, 2015 and 2014) were utilised. The topmost equities frequently appearing in the various mutual funds were preliminary grouped, followed by brief background study of their performances. The table below provides comparison between the top 5 equity holdings of the seven different mutual funds. For detailed (raw) data of the top equity holdings compilation, click on this link: Top five equity holdings of selected mutual funds.


Table 1: Comparison of top 5 equity holdings of selected mutual funds


Mutual fund

Top 5 Ghanaian equity holdings




6 *CDH Balanced Fund CAL, FML, GCB CAL, FML, GCB Fund was not yet established
7 FirstBanC Heritage Fund Annual report not available EGL, EGH, GCB, SCB, SOGEGH EGL, SOGEGH, GCB, TOTAL, GOIL

*CDH invested in only three (3) stocks.

Observations and analysis

From the table above, GCB bank Ltd. (GCB) occurs 18 times out of the 19 studied annual reports. This is followed by Standard Chartered Bank (GH) Ltd. (SCB) which can be counted 13 times out of the 19 annual reports. The rest, in descending order, are Fan Milk Limited (FML), 12 times; Enterprise Group Limited (EGL), 12 times; Ghana Oil Company Limited (GOIL), 10 times; Ecobank Ghana Limited (EGH), 8 times; Total Petroleum Ghana Limited (TOTAL), 7 times; Societe Generale Ghana Limited (SOGEGH), 3 times. CAL Bank Limited (CAL), 3 times; Ecobank Transnational Incorporated (ETI), 2 times; HFC Bank (Ghana) Limited (HFC), 2 times; Mega African Capital Limited (MAC), once.

In total, 12 different stocks could be found in the top five equity holdings of the mutual funds. However, considering the comparatively low occurrences of SOGEGH, CAL, ETI, HFC and MAC, they were delisted, leaving the rest of the seven stocks as the preliminary group for further studies.


Table 2: Preliminary group of foundational stocks

Stock Number of occurrences in top 5 holdings
GCB 18
SCB 13
FML 12
EGL 12

To study further on the above stocks, their historical performance trends were looked into. Simply, two main performance indices were examined- annual returns and dividend yields. It must be noted that stocks with fairly good returns can be indication of investors’ confidence in the companies. Furthermore, while dividend pay-outs provide regular income source, they also signal financial stability of companies. The latest 5-year annual returns and dividend yields of the stocks can be seen in the tables below.

Table 3: Latest 5-year performance results

Company Trading symbol Return, %
2012 2013 2014 2015 2016  Average
1 Enterprise Group Limited EGL 26.3 291.7 -6.9 37.1 0 69.6
2 Fan Milk Limited FML 50.4 86.5 -20.7 40 51.7 41.6
3 Ghana Oil Company Limited GOIL 93.8 43.5 19.1 33.3 -21.4 33.7
4 GCB Bank Limited GCB 13.5 131 13.4 -34.9 -6.1 23.4
5 Ecobank Ghana Limited EGH -6.3 87 35.5 7.6 -8.6 20
6 Standard Chartered Bank (GH) Ltd. SCB -74.7 29.9 36.2 -19.9 -25.2 -10.7
7 Total Petroleum Ghana Limited TOTAL 18.5 N/A 20.6 -16.4 -61.2 -9.6
GSE all-share-index 23.81 78.81 5.4 -11.77 -15.33 16.18


Table 4: Latest 5-year dividend yield

Company Trading symbol Dividend yield, %
2012 2013 2014 2015 2016 Average
1 Enterprise Group Limited EGL 3.33 0.00 1.43 1.04 2.1 1.58
2 Fan Milk Limited FML 1.13 0.00 1.71 0.00 1.4 0.85
3 Ghana Oil Company Limited GOIL 2.26 1.61 1.52 0.00 1.8 1.44
4 GCB Bank Limited GCB 3.33 2.94 3.96 8.44 8.7 5.47
5 Ecobank Ghana Limited EGH 8 5.18 5.66 11.27 12 8.42
6 Standard Chartered Bank (GH) Ltd. SCB 26.52 3.14 5.65 0.00 2.3 7.52
7 Total Petroleum Ghana Limited TOTAL 2.81 13.72 1.61 2.25 2.3 4.54

In terms of annual performance, with the exception of Standard Chartered Bank (SCB) and Total Petroleum Ghana Ltd. (TOTAL), the rest of the stocks show impressive positive results. Moreover, their average returns exceed that of the GSE (all-share index) in the same period. Enterprise group limited (EGL) beats the GSE index in 4 out of 5 years. Fan Milk and GCB similarly perform better than the market index in 4 out of 5 years while Ecobank and GOIL both exceed the index in 3 out of 5 years.

For dividend yields, Ecobank Ghana and Standard Chartered Bank lead with impressive average yields of 8.42% and 7.52% respectively.

It may also interest you that five of these stocks had even been commended in an earlier article recently. In the article by Kofi Busia Kyei (a financial analyst), EGL, EGH, FML, GOIL, and GCB were highlighted together with UNIL and BOPP as the few listed stocks that had offered great returns to investors in the past 10 years (Refer to the chart below).

foundational stocks _performance
Figure 1: 10-year return of selected stocks on the GSE Credit: Kofi Busia Kyei (a financial analyst)

Even though the performance trend of SCB doesn’t look so good, the high extent of its occurrence in the top five holdings of the various mutual funds may be due to positive future projections. The fund managers may have realised from their analysis, good earning or growth expectations of SCB, thus chasing its shares. Don’t forget that SCB is one of the few stocks that have recorded impressive returns in the current year so far. In fact, since the beginning of the year, its share price has appreciated by 115.52% as of 8th August 2017. Hence, considering it in our foundational stocks can be worth it. Unfortunately, because of the comparative low performance of TOTAL, in addition to its least number of occurrences in the top five holdings of the funds, delisting it from the group may be helpful for now. As a result, GCB, SCB, FML, EGL, GOIL and EGH can be finally listed as our proposed foundational stocks- six foundational stocks made up of three banking stocks, one insurance stock, one manufacturing stock and one petroleum stock (see Figure 2 below).

Foundational stocks
Figure 2: Proposed foundational stocks comprising six listed companies


The similarities between top 5 equity holdings of various mutual funds gave rise to this write-up. Through comparison and further background studies, six listed companies have been proposed as foundational stocks. These can be useful to investors in building their stock portfolios.

If you’re a new investor deciding on buying stocks from the exchange, you can think of starting with at least, one of these companies. Furthermore, investors who are already trading in stocks may also consider rebalancing their existing portfolio and perhaps buy more of these particular stocks.

Finally, if you’re yet to own shares of these stocks, my personal advice is to begin moderately with the ones that have already attained high appreciation in their share prices. For instance, the year-to-date returns of GOIL and SCB are currently 108.18% and 115.52% respectively, as of 8th August 2017. Even though they still have the potential to continue with their gains, the potential to fall is also inevitable due to the high prices already achieved.

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.