Africa fund open again for trading
The fund has been closed for trading since the end of May, but is now opening again, allowing investors to sell their holdings.
Danske Invest’s Africa fund has been closed for trading since 30 May 2016. First, an imminent devaluation of the Nigerian currency, the naira (NGN), created uncertainty on pricing, and then problems arose with exchanging the Egyptian currency, the Egyptian pound (EGP).
“This was an extraordinary situation whereby exchanging precisely those currencies the Africa fund has major investments in became difficult. To ensure all investors in the fund were treated equally and that all who wanted to cash in their units could do so, we have unfortunately been forced to keep the fund closed for a rather lengthy period. Now, however, we are able to open the fund again,” says Morten Rasten, Managing Director, Danske Invest.
Investments in Nigeria and Egypt reduced
Between the end of May and now, the fund has reduced its investments in Nigeria and Egypt to less than 4% of the fund overall. Instead, the fund has invested in far more liquid papers, such as South African government bonds.
“We estimate we have reduced our investments in Nigeria and Egypt sufficiently for us to open the fund and accommodate the sale of units we expect will come with the reopening,” says Morten Rasten.
What it means for investors
Investors can now sell their units in Danske invest Afrikka, Osuuslaji EUR. However, Danske Invest will not continue to issue new units in the fund, as we are still considering closing the fund or merging with another fund. We expect an extraordinary AGM in early 2017 to decide on this.
The net asset value of the unit class as of 30 November has been calculated at EUR 7.25. This represents a fall of EUR 0.79 since the fund was closed on 30 May 2016. The loss is mainly due to the Nigerian and Egyptian currencies weakening.
Strategy change and new portfolio advisor
The Africa fund’s strategy was changed from active to passive management on 1 September, while Danske Capital took over the role of portfolio advisor from Investec Asset Management on the same date. The changes mean the fund’s ongoing administration costs have been reduced from 1.85% to 0.62% annually.
