Unit trusts assets cross Sh200 billion on handsome returns

Total assets under management held by unit trusts or collective investment schemes crossed the Sh200 billion mark for the first time in September 2023, revealing the continued growth of pooled funds as a popular investment option.

According to the latest data from the Capital Markets Authority (CMA), the funds’ assets under management hit Sh206.6 billion at the end of last September from Sh175.9 billion in June. The growth has partly been helped by returns on the investment vehicles surging to double digits amid a general rise in interest rates.

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

GenAfrica Unit Trust Scheme saw the highest rise in assets during the quarter at 237.8 percent to hit Sh212.4 million from Sh62.8 million previously. Other schemes that grew assets by more than twofold in the period were Enwealth Capital Unit Trust Scheme, Britam Unit Trust Scheme and Etica Unit Trust Scheme whose assets under management reached Sh62.5 million, Sh33.3 billion and Sh131.1 million, respectively.

CIC Unit Trust Scheme remains the largest collective investment scheme by assets with a 29.6 percent market share as of September 2023 or Sh61.1 billion.

The CMA had licensed 29 unit trust schemes as of last September with the latest entrant being Mayfair Asset Managers.

Collective investment schemes invest funds pooled mostly from individuals/retail investors and invest primarily in government securities and banks’ fixed deposits.

The investment vehicle has proved popular among retail investors in recent years and has been anchored largely on low entry-level requirements where the average scheme requires a minimum Sh500 initial investment in contrast to other asset classes such as bonds which require upwards of Sh50,000.

Unit trusts have also taken the fight to commercial banks’ saving accounts by offering a premium to the return paid by both current and savings accounts.

By the end of last year, for instance, net returns from the unit trusts stood at double digits beating both the savings and fixed deposit rates.

Unit trusts, which are also referred to as money market funds, are overseen by licensed fund managers and have custodians and trustees who provide the opportunity for investors lacking in sophistication to invest in the capital markets.

During the review period, the largest part of the total assets under management was invested in government securities at 47.62 percent while 38.59 percent of the assets were held in fixed deposits.

Between the end of March and the end of June last year, the collective investment schemes increased their holdings of government securities and fixed deposits by 30.63 percent and 2.05 percent respectively.

Read: Unit trusts cut fixed deposits to hoard cash in quarter to March

The schemes, however, significantly reduced their holdings of investments in peer unit trusts and immovable property by 39.4 and 35.4 percent, respectively.

Other asset classes chosen by unit trusts include unlisted securities, cash and demand deposits, listed securities and off-shore investments.

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