Republic Equity Trust posts 20% return on stock rally

Republic Equity Trust delivered a robust performance in 2024, posting a return of 19.98 percent on the back of a strong recovery in Ghana’s equity market, a sharp contrast to the 4.38 percent return recorded the previous year.

The fund’s net asset value rose by 18.8 percent, from GH¢13.88 million to GH¢16.49 million. This growth was largely driven by a reallocation of assets towards equities, which accounted for 53.79 percent of the fund’s portfolio at year-end, up from 41.80 percent in 2023. The shift was a deliberate strategy to take advantage of improving market conditions and subdued returns in fixed-income markets.

“Investor confidence in equities improved significantly, and our strategy was to position the fund to benefit from that momentum,” said Madeline Nettey, CEO of Republic Equity Trust.

Ghana’s stock market had a standout year, with the GSE Composite Index gaining 56.17 percent — its best performance since 2013. Market sentiment was buoyed by improved earnings in the financial and consumer sectors, and a reallocation of capital away from government debt and towards listed stocks.

Unilever Ghana led the rally with a 140 percent gain, while Ecobank Transnational rose by over 106 percent. MTN Ghana shares also climbed nearly 79 percent, ending the year at GH¢2.50. GCB Bank and the ABSA NewGold ETF returned 87.4 percent and 78.7 percent respectively. These stocks were among those held by the fund, which helped boost its overall returns.

Despite the price appreciation, trading volumes declined during the year, a signal that investor caution remains amid ongoing macroeconomic risks.

“The lower volumes suggest that while prices recovered, not all investors were active in the market,” said Ms. Nettey. “But for long-term investors, the value opportunities were compelling.”

The fund also maintained exposure to government bonds and bills (28.28 percent), fixed deposits (17.04 percent), collective investment schemes (0.70 percent), and cash and equivalents (0.19 percent) to manage risk and preserve liquidity.

Macro conditions in 2024 were mixed. Inflation ended the year at 23.8 percent, slightly above the 2023 figure. The cedi depreciated sharply against major currencies, although the Bank of Ghana’s interventions moderated its slide against the dollar. Treasury bill yields fell across all maturities, and the central bank’s policy rate was cut to 27 percent by year-end, down from 30 percent the previous year.

These trends helped make equities a more attractive option for investors seeking inflation-beating returns.

Republic Equity Trust expects further gains in 2025. “With interest rates likely to decline further and selected equities poised to reach new highs, the market remains favourable,” said Ms. Nettey.

The fund will continue to focus on long-term capital appreciation by investing in dividend-paying stocks and sectors with strong growth potential.

The fund manager expressed confidence that consistent contributions by investors would benefit from the projected upswing in equities, adding that the fund’s performance underscored its resilience in the face of challenging economic conditions.