How Can My Investment Earnings Fall?

DigiSave invests in the Plus Income Fund – an open-ended mutual fund whose investment strategy is to actively manage a basket of high quality fixed income investments such as; Government of Ghana Bonds, Treasury Bills, Fixed Deposits, and Corporate Bonds to provide you with steady growth in your investment capital. To successfully execute this strategy, the investment manager (Black Star Advisors) faces two types of risk;

The first type of risk is called Diversifiable Risk. This is the kind of risk you face when you decide to buy only one type of investment out of the thousands of investments available. It is akin to putting all your eggs in one basket. For example, if the investment manager for DigiSave decides to buy only one type of Government of Ghana Bond and ignore the others, you will not have support from other investments to offset fluctuations in that single investment.

Thankfully, DigiSave, which invests in the Plus Income Fund offers investors automatic diversification, which helps the investment manager reduce this type of risk and also benefits your investments in the following ways;

  • Increasing your chances of earning a high return with little risk, and
  • Reducing the impact of financial market losses on your investments.

Diversification means a mixture of investments (e.g. Treasury Bills, Government Bonds, Fixed Deposits, other collective investment schemes etc.) that respond differently to changes in financial market conditions.

The second type of risk, Market Risk, follows from economic factors such as: changes in inflation, currency, government policies as well as central bank policies. This type of risk is widespread and usually affects all aspects of the economy. Your DigiSave earnings or interest, which depends on the performance of the underlying investments in the Fund, is affected by this type of risk and is mostly beyond the control of investment managers. This means that, as much as your earnings are expected to grow, once a while, you may experience a drop in earnings when these economic factors behave in an undesirable manner.

Sound investing means buying low and selling high. It also implies that you do not react to the ebb and flow of the financial market. When it comes to investing, developing good saving habits matter and plays a very critical goal in meeting your financial goals. You need to consistently save and stay the course – thus sticking to your investment choice no matter the short-term fluctuations in value.

More about the Investment Manager of DigiSave (Black Star Advisors)
Blackstar Advisors is an asset management and investment advisory company, that provides across-the-board investment solutions utilizing a multi manager investment philosophy. Black Star’s investment beliefs that drive excellent performance include: Discipline, Active management, Growth biased, Fundamentals based, Research driven and Integrated risk management.

They manage over GHC 530 million in assets and have fifteen (15) dedicated and experienced staff with over 30 years of local and international experience. With regard to the Plus Income Fund, which was launched in February, 2020, they have generated an outstanding 12-month return of 18.68% as of February 2021. This compares favorably with an average return of 14.28% for the 182 day treasury bill for the same period under review.

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