The Harmony Portfolios are a long established range of globally diversified, multi-asset funds designed specifically to provide a cornerstone investment. The Harmony range consists of eight portfolios, each risk profiled and with a specific geographical and currency focus, housed in a Luxembourg UCITS structure with daily pricing and daily liquidity.
The Harmony Portfolios investment philosophy is built on three core capabilities:
The asset allocation process is disciplined, robust and valuation driven, and builds portfolios with true diversification across a wide range of non-correlated assets. ‘Best of breed’ fund solutions are then used to construct each portfolio. We recognise that no investment house has a monopoly of skill in all disciplines: having an unconstrained choice allows us to choose the most appropriate investment managers for any particular asset class. We are objective and independent in our approach, with no incentive to utilise a specific provider in the underlying composition of the portfolios.
The Harmony Portfolios aim to create the best combination of investments to provide optimal returns relative to each of the eight mandates’ tolerance for risk.
The full range includes:
As at the end of January 2018, assets under management across the eight Harmony Portfolios totalled approximately USD 700 million.
Andrew Hardy (Portfolio Manager) reviews the latest Harmony Portfolios’ performance as well as...
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Africa presents a compelling long-term investment opportunity as a result of the vast resources, young demographic and expected development of the African continent over the next 20 years and beyond. This opportunity requires a knowledge and understanding of Africa. At Momentum, we draw from our highly skilled and experienced internal teams of investment professionals and our well-researched network of external managers to present the best of Africa to the world with 3 funds – Africa equity, Africa fixed income and Africa real estate.
There are a number of macro-economic trends that make Africa an attractive investment destination for discerning investors. A lot of these are well documented in the press on a regular basis, but we are yet to see many global institutional investors starting to actively allocate monies to Africa. Here are the factors that we believe most strongly support the investment case for investing in Africa:
There are a number of macro-economic trends that make Africa an attractive investment destination for discerning investors. A lot of these are well documented in the press on a regular basis, but we are yet to see many global institutional investors starting to actively allocate monies to Africa. Here are the factors that we believe most strongly support the investment case for investing in Africa:
The most recognised trend has been the high level of economic growth experienced across most countries in the region. Many countries have grown at GDP growth rates in excess of 4% since 2000. In 2013, despite a slowdown in global demand and political turmoil, sub-Sahara Africa grew at 4.7% and is expected to remain stable at 4.7% in 2014, according to the World Bank.
Country | 2010 | 2011 | 2012 | 2013e | 2014f |
---|---|---|---|---|---|
Nigeria | 7.8% | 6.8% | 6.5% | 7.0% | 6.7% |
South Africa | 3.1% | 3.5% | 2.5% | 1.9% | 2.0% |
Angola | 3.4% | 3.9% | 6.8% | 4.1% | 5.2% |
SSA, excluding South Africa | 6.1% | 5.0% | 4.2% | 6.0% | 5.8% |
Source: World Bank
Much of the economic growth across sub-Saharan countries in recent years has been driven by domestic demand. For the last four years, domestic consumption of goods and services has accounted for two thirds of Africa’s GDP2. There is a growing middle class as can be seen in the following table. Domestic demand will continue to be supported by investment in the resource sector and infrastructure, and expansion of the agricultural sector.
Year | Number of people with an annual income greater than US$2,700 |
---|---|
2001 | 104 million |
2011 | 184 million |
2020 - estimate | 257 million |
Africa has the second-largest population in the world, estimated to be 1.033 billion people, and this is set to double, to two billion, over the next 40 years with more than half of the population in sub-Saharan Africa under the age of 254. Added to this, sub-Saharan Africa has the youngest population in the world, with more than half the population under the age of 25. The median age is now 20, compared with 30 in Asia and 40 in Europe. As the mass of young people in Africa are educated and become part of the working force, this will divide economic growth and we will see the dependency ratio improve. This ‘demographic dividend’ was crucial to the growth of East Asian economies a generation ago and offers a huge opportunity for Africa today.
Investment in the African continent is crucial to its development. Investment in infrastructure is critical to the growth and development of the region, especially in addressing power needs and improving roads. In recent years, capital inflows into the region have remained robust, hydrocarbon discoveries in countries like Mozambique and Tanzania have also helped boost investment in the region. The table below shows historical and future expected capital flows into sub-Saharan
2008 | 2009 | 2010 | 2011 | 2012 | 2013e | 2014f | 2015f | 2016f | |
---|---|---|---|---|---|---|---|---|---|
Total capital inflows, excl. FDI | 13.4 | 29.2 | 20.9 | 36.7 | 53.7 | 44 | 39.7 | 41.8 | 45.4 |
FDI | 33.6 | 30.2 | 24.0 | 31.5 | 28.8 | 31.9 | 32.5 | 35.6 | 38.4 |
Source: World Bank
Human capital is also returning to the African continent and we are seeing improvements in the quality of education. Many Africans who have been educated at top-rated global universities abroad and who have worked for prominent global corporations and institutions are returning home to be involved in business on the ground.
On a local level, we are seeing improvements in education, for example, in Angola, the number of children enrolled in primary school has tripled since 2001. During the same period, secondary school enrollment in Angola has gone up from 25% to 40% and adult literacy has risen from 57% to 63%3.
There has been a marked improvement in governance and stability across the region. These can be seen in measures such as the Mo Ibrahim Index.
The Mo Ibrahim Index of Africa Governance provides an annual assessment of governance in every African country. It is compiled in partnership with experts from a number of the continent’s institutions and focuses on quantitative data on governance in Africa. Each country is scored out of 100. The most recent significant improvements in the index have been seen in countries like Botswana, Ghana and Zambia.
2013 IIAG ranking | Score.../100 | 13-year change | |
---|---|---|---|
Botswana | 2 | 77.6 | 5.6 |
Ghana | 7 | 66.8 | 5.3 |
Kenya | 21 | 53.6 | 1.5 |
Mozambique | 20 | 54.8 | 2.3 |
Namibia | 6 | 69.5 | 2.3 |
Nigeria | 41 | 43.4 | 0.8 |
South Africa | 5 | 71.3 | 0.6 |
Tanzania | 17 | 56.9 | 1.4 |
Zambia | 12 | 59.6 | 8.6 |
Zimbabwe | 47 | 35.4 | 1.5 |
Source: Mo Ibrahim Foundation
However, improvements in governance and political stability are something to be closely watched, especially in countries such as Nigeria. Africa’s largest economy has its national, state and local elections in 2015. This will create a lot of uncertainty, where the attention is likely to be concentrated on political rallying rather than the growth of the economy. Other countries, like Kenya, have had a spate of terrorist attacks in recent months.
A reduction in inflation across the continent, lower foreign debts levels, decreasing budget deficits and improving democracies in recent years make Africa an attractive country to invest. Trends in African equity, fixed income and real estate make Africa a compelling and robust country that may create opportunities that the world has yet to realise, such as the development in the mobile technology sector and renewable energy.
Profile | Momentum Africa Real Estate Fund |
---|---|
Investment manager | Momentum Africa Investment Management Limited (Mauritius) |
Investment advisers | Eris Property Group (South Africa), Momentum Global Investment Management (London) |
Performance target | 18% net IRR in USD |
Investible universe | Geographic focus - Sub Saharan Africa ex SA: focus on Ghana, Kenya, Nigeria, Mozambique, Rwanda & Zambia |
Investment guidelines | Asset composition - development & management of retail, office & light industrial premises |
Base currency | USD |
Investment vehicle | Mauritian domiciled Global Business Company (GBC1) |
Fees | 1.75% management fee (on drawn capital only), performance fee of 20% above a 10% hurdle |
Target size | $150 million committed as at 31 July 2015. Commitments are capped at $250 million. Final close in early 2016. |
Group commitment | $10 million seed capital from Momentum Metropolitan Life Limited and personal investment by investment team |
Term | 8 years with two one year extensions |
Investment period | 5 years, with two 1 year extensions |
Leverage | 40 - 60% |
David Lashbrook: Head of Africa Real Estate at Momentum GIM
Tel: +44 (0) 207 618 1780
Mobile: +44 (0) 788 194 1248
Email: david.lashbrook@momentum.co.uk
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