Wednesday, 23 August 2017

Frequently Asked Questions

What is Korle Project, KPFund?

Korle Project Fund (KPFund)

Korle Project is an Investment Club with the primary aim of pooling funds (Korle Project Fund) and other resources from community members to undertake educational and development projects within inner city Accra

What will KPFund be invested in?

Korle Project Fund(KPFund) will be invested in:

  • Wholesale/Retailing of Goods
  • Residential-Retail Shopping Center development

What are the risks in investing in KPFund?

  • KPFund seeks to provide conservation of Capital, Current Income and long-term growth of both capital and income.
  • KPFund will invests primarily in Wholesale / Retailing of Goods that have a history of increasing earnings and included on eligibility list compiled by the Investment Strategy Committee
  • KPFund will also invest in Residential-Retail Shopping Center development
  • Investment in the KPFund is not a bank deposit and is not insured or guaranteed by any entity or person
  • Investment in the KPFund is subject to risks. The fund’s income and the value of its holdings may fluctuate in response to events in specific markets conditions, as well as economic, political or social events in the country
  • May lose money by investing in the KPFund. The likelihood of loss may be greater if you invest for a shorter period of time

Membership

This is open to all investors within and outside Ghana

What is the valuation system of KPFund?

The Unit Valuation System (UVS), is relatively simple, and should be easily understood by all members. It also caters for different size holdings, and enables new members to join the club at any time without benefiting (or suffering) from the past profits (or losses) of the club.

 

Under this system

  • When the Club is lunch, units will be value at one (1) Cedi, so members get one unit for every Cedi they invest
  • The value of units is recalculated every month, to reflect the receipt of income and changes in the value of the Assets owned by the Club. Calculate the unit value by taking the assets of the Club and dividing them by the number of units already issued
  • Purchases and sales during a month take effect at the valuation at the end of the previous month
  • Service fee will be charged when members withdraw money by selling units

The four forms which provide the framework for the UVS are:

  • Cash Account
  • Members’ Capital Account
  • Investment Record
  • Monthly Assets Statement

This system operates on a simple formula:

C = A / B

Where:

A = the value of the club’s net assets i.e. the current value of the club’s investments and cash in the bank, less any liabilities

B = the total number of units bought by all the members

C = the current value of each unit

At the outset the value of a unit is one (1) Cedi. As the value of the club’s investments changes, so will the value of the unit.

Is there an example of the valuation system?

XYZ Club has ten members, each contributing an initial lump sum subscription of GHc50 and then GHc20 per month.

 

Month 1

 

  • The club’s assets are GHc700 in the bank. Each member owns 70 units valued @ 1 Cedi. The club decides there is as yet insufficient money to make an investment.

 

Month 2

  • All members make their GHc20 contribution and a new member, BBB, joins. BBB pays the initial subscription of GHc50and the GHc20 monthly sub.BBB now has 70 units and the initial members have 90 units. The Club has GHc970 in the bank, and units are valued @ 1 Cedi.

 

Month 3

  • 11 members pay their GHc20 and there is GHc1,190 in the bank. The founders have 110 units each and BBB has 90.
  • The Club buys 9 bags of maize @ GHc100.00 each. With expenses, the total cost is GHc1,030, leaving GHc160 in the bank.
  • After the sale of the maize the net money realized was GHc1,250, so with GHc160 in the bank, the club’s assets value will now be GHc1,410.
  • Dividing GHc1,410 by the 1,190 units gives a unit value of Ghc1.18. To get the value of their holding, each member multiplies the number of units they hold by the unit value of GHc1.18.
  • Founding members’ holding = 110 x Ghc1.18 = Ghc129.80
    BBB’s holding = 90 x $1.18 = Ghc106.20

 

Month 4

  • Each member pays in GHc20. However, because the unit value has risen, the GHc20 contribution no longer buys 20 units. With a unit value of GHc1.18, Ghc20 buys each member 16.95 units.