One of the world’s largest asset management firms with over $763.9 billion in assets under management, Franklin Templeton, has released new information about its african fund portfolio being managed by Emerging markets guru Mark Mobius.
At the end of November 2016, the American wealth management firm in its Africa fund had invested more than $67.1 Million (Ksh 6.7 Billion) in 30 african publicly-traded stocks. Interestingly enough, four of these stocks are listed at the Nairobi Securities exchange and collectively accounted for about 19.56% of “Templeton African Fund” portfolio value.
Kenyan Exposure;
1. Safaricom Ltd
According to the fillings dated 30th November 2016, the “Templeton Africa Fund” had 5.63% of its assets invested in Kenya’s Safaricom Ltd, the largest and most profitable listed company in East and Central Africa. The 5.63% constitutes of approximately 20 million shares of Safaricom worth $4 Million.
Safaricom has a strong competitive advantage and its the second best performing company at the NSE since the start of the year. Over this period, it has outperformed the benchmark NSE 20 Share index by more than 20%. During the half year period, Safaricom’s net earnings grew by more than 32% over the same period in the previous year.
2. KCB Group
Kenya’s largest bank by assets now represents just 5.87% of the fund’s total portfolio value, down from 18.4 million shares which was equivalent to 7.06% as of September 30th 2016. The fund cut its position in KCB by 1.2% after President Uhuru Kenyatta signed into law a bill to cap interest rates at 4% above the Central bank rate.
The stock has plunged by more than 25% since the year began.
3. East African Breweries Ltd
As at November 2016, East African Breweries Limited (EABL) accounted for 5.10% of the fund’s total portfolio down from 5.32% two months earlier. Its not clear why Templeton sold part of its holdings in the brewer.
4. Equity Bank Group
Equity Bank is arguably Kenya’s most innovative bank and maintains higher than industry average returns-on-equity and returns-on assets.
The bank accounted for about 2.95% of Templeton’s Africa fund as of quarter three of 2016.
Related; World’s Largest Sovereign Wealth Fund’s Investment Journey in Kenya
Strategy;
In a recent blog post, Mark Mobius, the executive chairman of Templeton Emerging Markets Group, noted, “We regard South Africa as the most important market in Africa, followed by Nigeria, Kenya, Ivory Coast, Ghana and Zimbabwe. Despite some near-term challenges, we hold a positive long-term view on African markets in general, as they have the potential for strong economic growth, which, we believe, produces an environment favorable to corporate profitability and earnings growth.”
Mobius and the group’s Chief Investment officer while on an interview on CNBC noted that their investment strategy in emerging & frontier markets is looking at stocks that offer better valuations and are trading at a significant discount on a price-to-earnings.
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