African Frontier Fund

History of the fund

The Optis African Frontier Fund is a long only equity fund that was launched in August 2009. Prior to 2009, Optis Investment Management managed the Optis Africa Fund, a long short equity hedge fund established in July 2007. During the 2008 financial crisis, the Africa hedge fund was one of the best performing Africa funds. The latter was achieved through high cash levels and significant exposure to African based commodity companies with correlated hedges. As exposure to locally listed non-commodity companies increased, correlated hedges were more difficult to find as African exchanges (ex SA) do not allow short trades. As a result, it was then decided to establish a long only equity strategy. A significant portion of the Africa hedge fund’s assets were moved into the new long only fund and the hedge fund was subsequently closed in 2010.

Strategies

The Optis African Frontier Fund is a long only equity fund. The fund can invest in any listed company with an African focus as long as the company’s listing is not on the Johannesburg Stock Exchange. Whilst the majority of the fund is invested in companies listed in Africa, the fund is also able to invest in companies that are listed in, but not restricted to, London, Toronto and Sydney. The fund does not track any benchmark but country allocations are restricted to 50% of the fund. Individual company investments are limited to 10% of the fund. Over the fund’s 5 year history, the fund has been almost fully invested but cash exposures have been increased to around 30% for a limited period.

 

The Optis African Frontier fund is managed on a long term thematic investment approach with a value bias. We believe that margins and returns move in cycles and we try to anticipate the likely trends on a two to three years view. The fund does not employ a short-term trading strategy but we are cognisant of valuations and trade when appropriate. We use country and sector allocations for portfolio construction but use these as guidelines only. We believe in active, on the ground in-house research and the team spends considerable time visiting companies and travelling around Africa. Our objective is to outperform our peer group over time including bull and bear markets.

11

Nigeria

28

Egypt

14

Kenya

2

Other

4

Cash

26

Morocco

9

Canada

3

Mauritius

1

Senegal

1

Rwanda