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CIC unit trust widens market share to 41pc

By John Otini
Friday, October 30th, 2020
Economic growth. Photo/Courtesy
In summary
    • Collective investment schemes are pools of funds that are managed on behalf of investors by a professional money manager. The manager uses the money to buy stocks, bonds, or other securities according to specific investment objectives that have been established for the scheme.
    • Unit trusts are popular with small investors seeking management of funds within a larger diversified and more efficient pot. In the quarter ended June 2020, 43.4 per cent of the total assets under management was invested in government securities.
    • About 35 per cent of the funds went into fixed deposits while 8 per cent was invested in stocks at the Nairobi Securities Exchange (NSE) while 7 per cent was in cash and demand deposits.Only 0.48 per cent was invested in immovable property.

Collective Investment Schemes (CIS) have been one of the most significant developments in financial intermediation in the recent past as Kenyans sought alternative ways of making their money work for them.

Capital Markets Authority (CMA) data shows that CIS assets have been rising sharply as a share of national income and a share of financial assets, with the value of wealth standing at Sh88 billion in June.

For instance, CIC Unit Trust Scheme widened its grip on the collective investment schemes market to 41 per cent as of June 30 as Amana Unit Trusts endured a 65 per cent outflows.

Its closest rival Britam Unit Trust’s Sh10 billion assets under management are a far cry from CIC’s Sh36 billion worth of assets.

“CIC Unit Trust Scheme led the pack managing the largest portion of the funds, followed by Britam Unit Trust Scheme,” CMA said in its latest quarterly statistical bulletin.

Under management

Amana Unit Trust lost 65 per cent of her assets under management from Sh597 million to Sh203 million in the period under review.

A poor business environment saw investors seek safe havens for their money which lent a boost to the schemes even as bank deposits also grew.

ICEA, NCBA and Old Mutual were the third, fourth and fifth largest funds in that order reflecting the choices investors made on where to store their wealth.

Most of the funds were invested in government securities as the stock market suffered massive sell off due to Coronavirus (Covid-19) crisis.

“In the quarter ended June 2020, 43.4 per cent of the total assets under management was invested in government securities,” CMA said. Only 0.48 per cent was invested in immovable property.

About 35 per cent of the funds went into fixed deposits while 8 per cent was invested in stocks at the Nairobi Securities Exchange (NSE) while 7 per cent was in cash and demand deposits.

Kenya’s high thirst for debt is handing investors high returns, especially during uncertain times caused by the pandemic.

The top five collective investment schemes control 80 per cent of the assets under management leaving the remaining 15 asset managers to share the remaining 20 per cent.

The quarter also experienced a net foreign investor outflow of Sh4.5 billion as compared to an inflow of Sh263 million at the same period last year.

Cytonn Investments which attracted media attention due to investor selloff in September and October gained 25 per cent between the March and June to Sh951 million worth of assets under management by June 30.

It had the largest assets under management in 2015, this shows how far the fund has fallen due to investor drawdown, especially following its disputes with the regulator where the public was warned against investing in Cytonn.

Three schemes

Equity Investment Bank assets under management contracted 16 per cent to Sh329 million, making one of the three schemes to lose funds as the collective investment market boomed.

Assets managed by Stanlib Unit Trust Scheme dropped 100 per cent after it was acquired by the ICEA Unit Trust Scheme while Old Mutual contracted by 0.07 per cent.

ICEA Lion paid Sh263 million to purchase Stanlib’s operations in Kenya and Uganda as it sort to build its market share.

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