In a bid to navigate a complex economic landscape marked by a slowing global economy, high inflation, and sovereign debt defaults, EcoCapital Prime Fund assured shareholders of significant adjustments to its investment strategy.
EcoCapital Prime Fund’s strategic adjustments reflect its commitment to preserving shareholder capital while delivering strong and balanced returns, particularly in the face of a turbulent global economic environment.
The fund’s Board Chairman, Dr. Hillar Addo, reassured shareholders and the investing public of their unwavering commitment to safeguarding capital and delivering balanced returns.
“As we move forward, rest assured that Prime Fund will persist in delivering balanced returns, safeguarding capital, and acting in the best interests of our valued shareholders,” stated Dr. Addo, emphasising the fund’s dedication to preserving investor trust.
EcoCapital Prime Fund, a prominent player in the financial sector, expressed its commitment to exploring avenues that consistently add value to shareholders’ funds. Dr. Addo urged shareholders and the investing public to continue their business with the fund, highlighting the ongoing commitment to excellence.
One of the core elements of the fund’s strategy is the rebalancing of its portfolio mix. The new approach focuses on short-term securities with minimum volatility, aiming to enhance the fund’s liquidity without compromising risk or return. This shift entails a significant reduction in the concentration of Government of Ghana bonds within the portfolio. Risk management strategies will remain a central component of the fund’s policy formulation.
Acknowledging the uncertainty in the markets, Dr. Addo emphasised the fund’s dedication to prudently managing investments, adapting to changing market conditions, and identifying opportunities. He also highlighted the recent approval of a US$3billion facility for Ghana by the International Monetary Fund (IMF). This approval is expected to bolster the country’s financial and fiscal management, enhancing its credibility on the global stage.
Recent attention on sovereign debt defaults and their potential impact on fixed-income investments has prompted the fund manager to make crucial adjustments to the investment portfolio. The primary focus will be on shorter-term, lower-risk securities, aiming to increase the fund’s liquidity while safeguarding investor interests.
As global GDP is projected to slow down further, exacerbated by the Russia-Ukraine conflict and the impact of Western sanctions on the Russian economy, EcoCapital Prime Fund remains vigilant.
The recent Domestic Debt Exchange Program (DDEP) in Ghana has brought to light the imminent sovereign default and the realities of its impact on fixed-income portfolios. The success of this programme, aimed at improving debt sustainability, fiscal stability and economic growth, hinges on effective implementation, transparency and sound financial management.
This programme’s implications extend to the financial sector, given the substantial exposure of banks, insurance companies, and pension funds to government debt, accounting for 42.1 percent of domestic government debt holdings.
Fund performance
In terms of performance, the fund chose not to swap its Government of Ghana bonds for new bonds with different terms, which was a prerequisite for Ghana to secure an extended credit facility from the IMF. This decision leaves the fund with some Government of Ghana bonds in its portfolio.
The Securities and Exchange Commission’s introduction of Mark-to-Market valuation, based on current market prices rather than original purchase prices, will be fully implemented in 2023.
Despite the economic challenges, the fund posted a commendable 27.8 percent return last year, showcasing its ability to navigate turbulent market conditions.
In 2022, Ghana’s GDP growth rate decreased to 3.2 percent from the previous year’s 5.4 percent, primarily due to a slowdown in non-resource sectors. Extractive industries, on the other hand, experienced growth, thanks to increased gold exports.
