Danske Invest Africa changes advisor and strategy
The fund remains closed for trading due to currency exchange problems in Egypt. The Danske Invest Board of Directors are looking at the possibility of liquidating or merging the fund.
Since the end of May, the fund has been closed for buying, selling and trading due to the currency exchange problems in Nigeria and Egypt. The fund's investments in these countries make up about a quarter of the portfolio. In Nigeria the problems have been partly resolved, but they persist in Egypt, which constitutes about 17 percent of the portfolio. Therefore, the suspension will remain in force until further notice.
Liquidation or merger
The Board does not consider the situation sustainable in the long term; therefore they are considering the possibility of liquidating the Fund or merging it with another at some point in order to achieve the best possible solution for investors. When there is a specific plan for managing the currency exchange problems, the Board will convene an extraordinary general meeting to decide on the fund’s future.
From active to passive management
The fund's assets have been reduced to approximately DKK 161 million, which in practice is too little to continue the fund’s current active management. At the same time, conditions in the markets where fund operates have changed, impairing cash flow.
The fund's performance has been unsatisfactory, and that is why the Investeringsforeningen Danske Invest Board have decided to terminate collaboration with the existing portfolio advisor, Investec Asset Management of London and Cape Town. The fund’s strategy will be switched from an active strategy with benchmarks to a passive strategy without benchmarks, focused on cash flow, diversification and low costs. With the new strategy, the fund will also take the opportunity to invest in African bonds. The role of portfolio advisor will be taken over by Danske Capital.
What this means for us as investors
You still cannot to sell or buy shares of the fund. We are working hard to find the best solution for investors, but unfortunately cannot at present say when the problem will be resolved. The value of your investments in the Africa Fund will continue to depend on market developments.
The changes, which will take effect on 1 September 2016, mean that the Fund's costs will be reduced from 1.85% to 0.62% per annum.
