Malawians yet to embrace Unit Trust
Old Mutual Unit Trust has said Malawians are yet to embrace the concept of unit trusts, five years after the sole unit trust entered the market.
Old Mutual Unit Trust Fund managing director James Mhura said this yesterday in Blantyre on the sidelines of Old Mutual Unit Trusts Fund Fifth Annual General Meeting in Blantyre.
He said despite registering growth from an increased participation, there are still more people who do not know anything about the investment medium.
Said Mhura: “We saw a lot of people participating in unit funds, which saw the size of the fund growing from K5 billion to K7.5 billion by the end of 2015. However, we still see that there are people out there who don’t know much about unit trust.
“It is our role to make sure that we still go out to as many people as possible because we believe that the growth of the fund will come from as many people investing, which will lead into diversification as well as returns on the fund.”
Unit trusts are a pool of funds that aggregates funds from like-minded individuals to be invested in high-earning instruments on the investment market through, among others, expert guidance on financial matters.
Old Mutual Unit trust is an umbrella fund with two sub-funds, namely Old Mutual Money Market Fund and Old Mutual Balanced Fund.
The money market fund provides an efficient investment medium whereby investors can participate in a diversified portfolio of debt securities, fixed deposit instruments or near cash and cash holdings while balanced fund provides an efficient investment medium whereby investors can participate in a diversified portfolio of securities to achieve steady regular income from the money market and equity portion of the fund.
Mhura described the performance of the company in 2015 as encouraging, observing that the money market saw rates ranging from 17 percent to 24 percent at the peak with an average of around 20 percent and that these were some of the best rates.
On the other hand, balance fund witnessed a return of around 15 percent although the equity market did not do well.
“Considering the harsh economic environment and that unit holders are people living in the country and we rely on their saving, poor performance of the economy negatively affects us because the levels of investment also declines as we rely on the people’s savings to grow the fund,” he said.
In her remarks, Old Mutual Unit Trust board chairperson Edith Jiya said the operating environment has been challenging to the unit trust.
“This is among other reasons due to the rising inflation rates and the performance of the Malawi Stock Exchange [MSE] which is not satisfactory for investment,” she said.
However, she said there are people willing to save and invest their money, adding that their aim is to make unit trust investments more accessible.
In 2015, the money market fund registered a K835.2 million profit from K484 033 the year before while the balanced fund’s profit increased to K154.9 million from K150.4 million the year before.
