Multi-asset specialist manager, Stanbic Investment Management Services (SIMS), has announced the measures that ring-fences new deposits from the mark-to-market valuation by setting up sub-class funds under the existing Stanbic Cash Trust and Stanbic Income Fund Trust. This was announced at the 2023 virtual Annual General Meeting (AGM) held on August 2, 2023.

This follows the decline in portfolio values experienced by collective investment schemes (CIS) investors after the Securities and Exchange Commission (SEC) directed CIS fund managers to adopt the mark-to-mark valuation methodology in valuing schemes in October 2022 for schemes with bond components.

In a report read by the Fund Managers of SIMS, they said, “Collective Investment schemes (CIS) witnessed negative net cashflows due to increased outflows by investors amid low inflows. A sharp rise in market yields caused most portfolios to record losses as they sold bonds at steep discounts to make liquidity available to clients.” The Securities and Exchange Commission, in October 2022, directed all CIS managers to apply a mark-to-mark valuation methodology in valuing the schemes/funds. The new valuation methodology led to a decline in portfolio values due to depressed bond prices. The uncertainty in market values, losses, and prevailing higher treasury bill rates resulted in heightened investor redemptions.

They added, “In response to a directive from the SEC dated October 20, 2022, the Manager adopted a mark-to-market valuation methodology for the Fund. To mitigate the impact of this valuation methodology on investors, Sub-Class funds, Stanbic Income Fund Trust AMC (SIFT AMC) and Stanbic Cash Trust (AMC) were introduced after a “no objection” was received from the SEC in December 2022 in a bid to ring-fence new fund subscriptions. The mandate of Stanbic Income Fund Trust AMC and the Stanbic Cash Trust AMC is to invest all new deposits in money market securities.” The “AMC” is an acronym for amortized cost and indicates the valuation method used to value the AMC sub-class funds.

To further protect their investors, SIMS has put in place a strategy to shore up their liquidity through a number of measures. The Fund Managers indicated that “Going forward, SIMS’ strategy will focus on generating liquidity through new inflows, selling portions of the Exchanged bonds, and assessing the Ghana Financial Stability Fund (GFSF) established by the Government in the absence of an active secondary market. The sub-class will ring-fence all new deposits and invest in money market securities. We will closely monitor market conditions as they improve.”

SIMS Ghana LTD. is a multi-asset specialist manager that connects retail and institutional clients with multiple investment opportunities across asset classes and markets. Stanbic Investment Management Service (SIMS) was incorporated in April 2007 as a wholly owned subsidiary of Stanbic Holdings Ghana LTD. SIMS is a licensed Investment Advisor with the Securities and Exchange Commission (SEC), Ghana, and registered with the National Pensions Regulatory Authority (NPRA), managing pension assets, collective investment schemes, provident funds, and retail and institutional funds.