Unit trust assets grow by Sh8.4bn in three months on good returns

The assets unit trusts or collective investment schemes managed grew by Sh8.4 billion in the three months to December, new data shows, signalling the rising popularity of pooled funds.

A unit trust is typically a collective investment packaged under a trust deed and run by a professional fund manager.

A fund manager may choose to invest in bonds or shares and the fund is split into units that investors purchase, granting them access to mortgages, securities, and cash equivalents.

Capital Markets Authority (CMA) data shows assets under unit trusts rose from Sh206.6 billion at the end of September to Sh215 billion at the end of December.

Read: Finding it hard to buy stocks? Try unit trusts

The improved asset base mirrors the growth and appeal of unit trusts among retail investors with the asset class proving popular for reasons including enhanced returns, low entry requirements, and ease of accessing funds.

Returns from the pooled investments, for instance, hit double-digit levels in December last year to follow yields/returns from fixed deposit accounts and government securities such as T-bills where the unit trusts deploy the majority of their portfolio.

As of February 29, for instance, the annual effective rate for unit trusts ranged between 6.8 percent and 17.42 percent with the bulk of schemes having returns above 10 percent.

CIC Unit Trust Scheme remained the largest unit trust fund by asset class with holdings of Sh63.3 billion or a 29.45 percent market share.

Other top unit trusts were Britam, NCBA, Sanlam, ICEA, and Old Mutual.

The six-unit trust schemes had a combined market share of 82.63 percent by the end of December.

At the end of the quarter, there were 36 approved collective investment schemes made up of 135 funds.

The CMA data further shows that fund assets under management — the total market value investment managed by an entity on behalf of investors — have grown nearly four times in the past six years.

“The assets under management increased steadily over the past six years from Sh56.6 billion as of March 31, 2018, to Sh215 billion as of December 31, 2023,” the CMA said.

Securities issued by the Government of Kenya remained the leading destination for unit trust assets worth Sh101.1 billion assigned to the investment class or 47 percent of the total portfolio.

Fixed deposits, meanwhile, hold the second largest portfolio of unit trust assets at Sh74.1 billion or 34.5 percent of the portfolio.

Read: Unit trusts assets cross Sh200 billion on handsome returns

Money market funds that invest the bulk of assets in fixed deposits remained the most popular type of collective investment scheme with 65 percent of schemes being money market funds.

A money market fund is a type of mutual fund that invests in highly liquid, short-term debt instruments, cash and cash equivalents.

→ (email protected)