Truestone Asset Management picks Alquity Africa Fund, partly on ESG factors


A business model which emphasizes a commitment to ESG factors has helped the Alquity Africa fund win a mandate from Truestone Asset Management.

A business model which emphasizes a commitment to ESG factors has helped the Alquity Africa fund win a mandate from Truestone Asset Management.

Terms were not disclosed but Paul Szkiler, CEO of Truestone said: “We recognise how quickly certain African economies are growing…the IMF predicts that seven of the 10 fastest growing economies across the globe will be in Africa across the next three years. That is a trend which is hard to ignore when advising clients, and the Alquity Africa Fund is an intelligent response to this trend, in our view.”

Szkiler added that the fund, launched in June 2010, is one of the few dedicated to investing across the African continent. It does not explicitly exclude South Africa, the largest and most liquid market, but “importantly, does not overweight the country, which allows the fund to gain exposure to several frontier markets such as Namibia and Mozambique. This gives a genuine pan-African exposure”.

Over150 stocks across Africa have a market capitalization of more than $500 million.

It also has a pan-sector approach, with allocation which doesn’t focus purely on materials, energy or extractive industries, but also on the more enduring trend of consumption by Africa’s growing middle class. An estimated 221 million consumers will enter the market by 2015.

Szkiler said it is one of only two African focused funds explicitly employing ESG (Environmental, Social and Governance) considerations into its investment decision making.

“For a continent where such considerations are invaluable, especially those around governance, Alquity demonstrates a leading edge practice in this area, which can act as an excellent risk control measure,” he added.

Paul Robinson, CEO of Alquity, said: “We hope this will be the first of many partnerships with forward thinking IFAs, who can see the potential for Africa. Our unique business model is starting to be recognised as a progressive alternative to the existing asset management approach of focusing only on relatively short-term gains for investors, without considering the long-term potential of working within frontier markets.”

“Our approach is different. We believe in a virtuous circle that gives investors a great return, through a long-term sustainable investment process, whilst donating back to the regions in which we invest through the provision of microfinance for the very poorest people. And as they start to make a more financially secure future for themselves and their families, then they also start to become customers of the companies in which we invest.”

Alquity has more than doubled assets under management during 2012 and has donated over $100,000 to micro finance projects, without affecting investor returns for the year of more than 15% (USD A Class share).

As part of its three core prnciples of attractive returns, sustainable investment and transforming lives, the company donates a minimum of 25% of its net management fees to microfinance projects. The aim is to transform 100,000 lives by June of 2013 and 100,000 lives annually thereafter.

Alquity Investment Management (Alquity) is part of the Alquity Group, which has approximately $70m of assets under management. The Africa Fund is the first in a planned range of emerging market funds. It is available internationally and has been registered for retail sale in the UK by the Financial Services Authority as well as in Hong Kong by the Hong Kong SFC. Alquity Investment Management is a signatory to the UN Principles for Responsible Investment.