HFC Investments

HFC Investments manages four collective investment schemes, all of which are licensed schemes by SEC (Securities and Exchange Commission). Kofi Ahovi takes a look at the performance of these funds over the last three years.
HFC Bank Ghana Limited, as a Universal Banking institution, was licensed in November 2003 to provide banking services to the banking public. The group comprises itself and four subsidiaries which are HFC Investments, HFC Realty, HFC Brokerage Services and Boafo Microfinance. These are wholly owned by HFC Bank except Boafo Microfinance in which it has 51% shareholding.
The wholly owned subsidiary of HFC Bank, HFC Investments, has proved to be one of Ghana’s most professional investment banking institutions with an outstanding track record in asset management, where aside from managing collective investment schemes, it also provides prudent fund management, individual client investment service, fund management for groups and institutions, as well as endowment fund management.

HFC Investments alongside Databank leads in the number of collective investment schemes it manages. It invests in the capital market through the HFC Equity Trust, in the money market through the HFC Unit Trust, and uniquely, in the real estate market through the HFC Real Estate Investment Trust (REIT). Its latest addition is the HFC Future Plan Trust (HFC F-Plan), which invests in the capital market and the money market locally. Total funds under management from the four (4) collective investment schemes, which stood at GH¢28.54 million in 2009, went up to GH¢39.47 million in 2010 and further rose to GH¢ 46.12 million by the end of last year. Currently it stands at GH¢46.82 million.

The schemes recorded impressive gains during a period where most collective investments were experiencing falls due to declining equity prices on the Ghana Stock Exchange (GSE).

Its expertise in fund management is clearly illustrated by the fact that all four funds are leaders in their respective areas of investment.

The HFC Equity Trust invests primarily in equities. The rest is invested in short term securities, bonds, and bank deposits, for purposes of portfolio diversification and liquidity, in order to ensure that members can cash part or all of their holdings within 48 hours of serving notice.

Last year, just as in previous years, the HFC Equity Trust outperformed the benchmark Ghana Stock Exchange all share index, providing a positive yield of 2.85% for the year, compared against the negative GSE all-share index of -3.10% clinched for the year. The key has been in the selection of equities.

This year (2012), the Trust is once again living up to its billing, delivering year to date gain of 0.11% by the end of last week, at a unit price of GH¢0.1805.

The HFC Unit Trust, established in 1991as the first collective investment scheme in the country, has proved to be an excellent way to derive the best returns on investment possible from the money market. To do this, HFC Investments adopts an aggressive, but prudent approach aimed at overall improvement in annualized yield, size of the fund and portfolio strategy.

The fund has so far posted an annualized yield of 11.38% for the year against 10.82% recorded for the benchmark 91-day Treasury bill. In December 2009, the annualized yield of the fund stood at 23.50%, 12.49% in 2010 and 11.24% in December last year.

This impressive performance was made possible by the fund managers continuous investment shift towards higher yielding fixed income investments.

The HFC Real Estate Investment Trust is a scheme that is in a class of its own being the only licensed collective investment scheme that invests in the real estate sector in Ghana. More importantly for investors it provides better yields than even the best performing equity funds.

In 2009, the HFC-REIT delivered a yield of 35.59% propelled by property development and property sales in Accra, Tema and Kumasi. Currently, it recorded an annualized yield of 15.89% for 2010, then to 13.51% in 2011 where it currently stands today.

The HFC Future Plan Trust (HFC F-Plan), the newest unit trust from HFC Investments, is a long-term collective investment scheme that has dual objectives. The primary objective of HFC F-Plan, which is a balanced fund, partially equities and fixed income, is to cultivate in the youth the habit of investing, while serving as an alternate investment vehicle for parents and guardians themselves. Secondly, the F-Plan also caters to the future educational needs of the youth.

The F-Plan invests mobilized funds into fixed income securities, shares of listed companies on the GSE. The fund has so far posted a year to date return of 0.65% at the end of last week. In 2009, it recorded a year to date return of 10.42% from inception in July 2009 to December 2009, then shot up to 40.21% in 2010 and dropped to 2.88% at the end of December last year mainly due to the unimpressive performance of the GSE during the second half of 2011.

Looking into the future HFC Investments plans to rebalance the portfolios of the various funds by investing more in blue chip instruments to provide higher returns for investors.