Money Market Funds remain the largest Unit Trust Fund
Unit trust fund investments in Kenya recorded a 4.3 per cent growth in 2018, latest industry data shows, as investors moved to deepen the capital markets and provide alternative funding for businesses.
During the year, Total Assets Under Management (“AUM”) held by Unit Trust Fund Managers grew to Ksh58.0 billion (US$574.8 million) up from Ksh55.6 billion (US$551 million) recorded in 2017.
This came as the money market funds continued to be the most popular product with the AUM held by Money Market Funds, having grown by 8.9 per cent to Ksh48.5 billion (US$ 480.6 million) in 2018
This was up from Ksh44.5 billion (US$441 million) recorded in 2017, a report by investment firm-Cytonn shows, indicating that Money Market Funds are growing faster than the overall market.
CIC Asset Managers recorded the strongest growth in AUM of 36.3 per cent to Ksh20.3 billion (US$201.2 million) in the year under review, from Ksh14.9 billion (US$147.7 million) the previous year.
For the top ten fund managers by AUM, Sanlam Investments recorded the highest decline in AUM of 31.7 per cent to Ksh1.8 billion (US$17.8 million ) from Ksh2.6 billion (US$25.8 million ) in 2017.
CIC Asset Managers remains the largest overall Unit Trust Fund Manager with a market share at 34.9 per cent up from 26.7 per cent in 2017.
Money Market Funds remain the largest Unit Trust Fund, with a market share of 84.3 per cent in 2018, up from 80.7 per cent a year earlier.
A unit trust is a way to accumulate wealth in which investors’ contributions are pooled together to purchase a portfolio of financial securities, such as equities (shares), bonds, cash, and bank deposits, managed by professional fund managers.
In 2018, the number of Fund Managers licensed by the Capital Markets Authority stood at 26.
New entrants into the Fund Management business include Cytonn Asset Managers Limited, the regulated affiliate of Cytonn Investments Management Plc, licensed on March 22, 2018.
Cytonn Asset Managers Limited has since launched its Unit Trust Funds including; Cytonn Money Market Fund, Cytonn Equity Fund and Cytonn Balanced Fund.
Commenting on the results, Cytonn Investments Chief Investments Officer Elizabeth Nkukuu said:“The performance by Unit Trust Funds had stagnated since 2016 but this has now improved, following the repeal of the rate cap, in September 2018, which has seen bank deposits rates drop making Money Market Funds more attractive to investors”.
“There is still more room for growth and it’s the work of Fund Managers to stimulate and deepen the capital markets, thus providing alternative funding for businesses consequently reducing the dominance by banks in the provision of funding,” she added.