Policy rate reduction to drive long term investment– Databank CEO
Investment Fund Managers are anticipating increased long term investments with the reduction of the policy rate by the Bank of Ghana(BoG).
The forecast is based higher returns on long term investments compared with short term ones.
The Bank of Ghana has for the third consecutive time reduced the policy rate to 21 percent, while inflation rate stands at 12.1 percent.
Speaking to Citi Business News on the matter, Group CEO of Databank, Kojo Addae-Mensah said financial institutions should gear towards long term investments to get higher yields.
“The reduction of the policy rate is going to affect short term interest rates, no doubt. We anticipated this and that is why for us as an institution, we have brought a motion to our general meeting that we need to get the mandate to then have access to longer dated securities. So going forward, we do not completely drop the yields”.
He added that investing in longer term yields would ensure a strong performance of financial institutions.
“I mean yields are now hovering around 11, 12 and 13 percent but the bond market is looking at 18, 19, 20 percent. So now that we have that mandate, I think that we are still going to maintain a strong performance and invest in longer dated securities,” he predicted.
Mr. Addae-Mensah spoke to Citi Business News when the Databank presented figures on its Mfund.
The Mfund recorded a growth of 24.97%. Its Bfund recorded a return of 11.9%, and its ArkFund recorded a return of 12.28%.
,Also on the performance of Epack, Board Chairman for the fund, Keli Gadzekpo, stated that Epacks cumulative performance since its inception in October 1996 stands at 25,754% and the EdiFund Tier 1, which is focused on helping clients meet short term educational needs, recorded a return of 24.32%, while EdiFund Tier 2, directed at helping clients attain long term educational needs, made a return of 21.72%.