Africa ETFCEOs DeskInvesting

Quarterly Investor reporting 2020 Q1


In times like these I’m reminded of the 1998 hit song by Jay-Z, Hard Knock Life. The outbreak of the Novel Covid-19 virus has created wide-spread destruction which one can easily measure by looking at the rapid spread of the pandemic (over 1million cases and 53,000 deaths); the number of countries going into lockdown and the slide of the global financial and economic markets; wiping off trillions of Dollars in value and surging unemployment in most countries. For South Africa the situation has been exacerbated by the recent downgrade of Government bonds to sub-investment grade by Moody’s, and many African Governments are now calling for debt relief to the tune of U$ 100 billion. Nothing in recent history has exposed the vulnerabilities of globalisation like this pandemic and its effects are expected to resonate throughout the decade.

Africa has reported over 7000 cases and over 280 deaths, with many critics suggesting that not enough testing is been done, which has been addressed by Dr Matshidiso Moeti the WHO Director for Africa. This begs the question whether Africa’s fragile healthcare system can survive a wide-spread outbreak, and other questions like how self-reliant are individual countries and the entire African region, will the ACFTA still become effective from 01 July 2020 or will there be delays and is the response from politicians sufficient to flatten the curve and prevent further economic collapse. Such questions have no answers in this environment but they do promote a deep assessment of what to consider when doing long-term planning and setting long-term investment objectives.

Cloud Atlas operations

At the start of the pandemic we managed to conclude our equity swap deal with Silk Invest, which investors can read about here:

In response to the Covid 19outbreak we remain operational through the lockdown imposed by South African President Cyril Ramaposa. Our staff have been directed to work from home unless necessary and we have been able to ensure that security protocols at the office are also observed online while will we undertake this directive.

We will assess the impact of this situation after the lockdown has ended to see if permanent changes in the organisations operation/culture will be necessary.

We wish all investors and their families safety and health during this time.

Written by Maurice Madiba

AMI Big50 ex-SA ETF

The Big50 represents 15 African stock markets and is designed to provide diverse exposure and multi-currency hedging. The outbreak of the Covid-19 virus has affected all asset classes and markets negatively and while the slide of markets has been in excess of 25%, as investors seek liquidity, the Big50 strategy has slide by -6.4%. It will take some time for the markets to recover from this outbreak, the timing of which is unclear, but one thing is clear, valuations of companies will never this low again.

The portfolio rebalanced in the month of March 2020. One constituent with a combined weighting of 0.27% has been replaced with a constituent with a combined weighting of 1.20%.

New additions: Umeme Limited (1.20%).

Removals: Kenya Power and Lighting (0.27%).

Fund factsheet:

Risk rating: Medium | Closing price: R 11.20 | Closing NAV R 9.82 | Number of units: 1,972,842 | Total Expense Ratio as targeted: 0.85% | Distribution: ZAR cents 0.00

AMI Real Estate ex-SA ETF

The global property market has contracted further in 2020 as it is one of the hardest hit sectors of the Covid-19 outbreak, this is coming on top of the contraction of the market in 2019, due to low global growth. Most JSE listed property companies are down 50-70% in share price, while the AMIRE contracted by -18.3%. With the fund size being what it is we are seeking to close or make dormant the portfolio so it stops to incur costs.

The portfolio rebalanced in the month of March 2020.

New additions: N/A

Removals: N/A

Fund factsheet:

Risk rating: High | Closing price: R 28.88 | Closing NAV R 21.14 | Number of units: 27,960 | Total Expense Ratio as targeted: 0.85% | Distribution: ZAR cents 0.00