Category Archives: Unit Trusts

Zenith Money Market Fund

The initial public offering of the Zenith Money Market Fund closes today.

Here’s a peek at the prospectus from which comes from asset management wing of Zenith, Nigeria’s biggest bank by revenue and assets. Others in the top ten would include FBN Holdings, United Bank for Africa (UBA) Access Bank, Guaranty Trust Bank, Diamond Bank, Ecobank Nigeria, Fidelity Bank, Union Bank and Skye Bank

  • It was to run from September 25 to October 13 – (but seems to have been extended  October 27)
  • The offer aims to raise 1 billion Naira (approx. 295 million Kenya shillings) and the minimum investment to join is 10,000 Naira (approx. $28 or Kshs 2,940)
  • The fund manager Zenith Assets Management also managers other funds – Zenith Equity Fund, Zenith Ethical Fund, and Zenith Income Fund.
  • Zenith Managers has 298 million Naira in assets (down from 352 million) in 2015 and 857 million in 2013. They had a profit of 20 million Naira in 2016 (down from 67 million in 2015) as personnel cost doubled in 2016
  • It is an open-ended fund in which the fund manager will own 5% and an investment committee will advise and guide the Fund Manager on investment decisions.
  • The asset allocation of the fund will be treasury bills and short-term government securities (25-100%), and other money market securities (10-75%)
  • The fund trustee is Vetiva Trustees, custodian is Stanbic IBTC Bank, and auditors are
  • For the issue, costs are estimated to be Naira 20.2 million (about 2%). Rating agency is Agusto & Co and Reporting accountants are Pro Edge Partners
  • The fund will attract an annual 1% management fee.
  • For the money market fund, Zenith projects to have assets of 1.5 billion Naira at the end of 2017, and 3.9 billion in 2019 and on to 12 billon in 2021.

Also see

Why Unit Trusts are better than Bank Savings Accounts

A guest post by @smartyannette 

We all desire to save and/or invest at some point in our lives but we fail to accumulate the little extra we have or we lack adequate financial know how to do so. Obviously, we are more likely to save if we have an investment goal and that’s why I think Unit trusts are a much better deal compared to saving accounts in banks.

Unit trusts are professionally managed collective investment schemes where investors pool their money. The accumulated funds are then invested in a portfolio of assets (stocks, bonds, bills, etc.) and the individual investors gain in proportion of their investment, if the value of the underlying assets increases.

Common Unit trusts are Money Market funds that invests in short term securities like Treasury bills, Equity funds that invest in a variety of stocks, Bond funds for bonds and finally Balanced funds that combines all these asset classes. The money market funds are considered low-risk and tend to have lower minimum balances. The others are mainly long term investment options. Gains from Unit Trusts range from about 8% to 16% per annum based on level of risk. In comparison, Commercial banks offer about 4% per annum and only fixed deposit accounts compete favorably, with some over 10%.

You should probably choose Unit Trusts over savings accounts because the former offer better rates of return. Also, If you desire to invest in the securities market, but want to avoid the risk of investing in one company then you may consider Unit trusts as a safer and more stable option. Unit trusts also enable one to invest in a variety of securities at once and get periodic interest unlike some banks that only award interest at year end. 

Investment Banks are specialized unlike commercial banks and you are more likely to easily access financial information and advice as well as brokerage services from the former. The recently-ended Capital Markets Authority open day expo in Nairobi showcased a variety of firms that offer their customers the option to invest in Unit Trusts.  They Include Old Mutual, Genghis Capital, Stanbic Investments, Dyer and Blair investment bank, Britam, Apex Capital, Apollo and CIC. The minimum balances are as low as Kshs. 500 at Genghis Capital and Kshs. 100,000 (~$1,200) for some of the other firms.

Most firms give a capital guarantee, meaning that the principal you put in is secure, but it is always safe to check. Management fees and initial fees also vary depending on the type of fund, and while some companies charge it based on the interest earned, others may charge it on principal. Some firms also allow you to access your money upon request via MPesa while others require you to wait for 3 business days for payments to clear. In comparison, money in a savings account is only an ATM visit away so chances of misspending are high.

Share Portfolio February 2009

Quarterly portfolio review after last snapshot in November 2008

The Stable
Diamond Trust ↓
Safaricom ↓
Scangroup ↓
Stanbic (Uganda) ↓

– Best performer: Diamond Trust -8%
– Worst performer Stanbic – 33%, Safaricom -23%
– In: none
– Out: none, but sold a little KCB in January

Events & Outlook
– Performance: Portfolio is down 20% in the last three months while the NSE Index is down 25%
– Did not buy KQ and Kengen as expected, but that should happen in the next few weeks as prices continue to drop
– Sat out the Co-OP IPO and made just one trade in three months (sold some KCB in January). Are brokers generating enough income to stay afloat? I hope they don’t try and introduce new charges levied on dormant investor accounts
Money markets: Got started in money markets by signing up with a CBA Unit Trust
Bond markets: The Government of Kenya has lowered the minimum investment for GoK treasury bonds to just Kshs. 50,000 (~600)
Investor awareness: The CDSC started sending out monthly statements by e-mail to investors, cutting out the postal service, and alerting investors each time shares are bought/sold using their account.

5 Investments for 2009

The year is about done and its time to start planning for 2009, with alternatives to build alongside the shares portfolio that will be carried into the new year.

1. Money Markets: Unit trusts are currently offered by African Alliance, Old Mutual, British American, Stanbic, CBA, Suntra, Zimele, ICEA. The bare minimums for signing up are about Kshs. 100,000 (~$1,300), initial fee of 2% and annual fee of 2.

2. Real Estate: It’s time for to undertake a real estate investment that should be done in 2009 following the Pesa Tu’s blueprint though financiers have gone rather shy and some developments appear to have stalled. Have we reached a real estate peak after which it becomes a speculative bubble?

3. Social Networks: Need to invest more in offline social relationships – with buddies, friends, mentors, peers, chama societies and sports for spiritual, social, and physical health.

4. Travel more: My passport has grown mould this year and the need to breathe a different sort of air, see new sights and meet new people – locally and internationally is imperative for 2009. I had always wanted to visit Sauri – the Jeffrey Sachs millennium village, now I must add Kogelo to my travel plans for western Kenya

5. Become a pirate?: Investing is about risk and reward and the numbers are there for the new hot profession of late 2008. It’s not very different from what is my daily bread anyway.

Old Mutual Toboa

Old Mutual Loosens Up Part II (Corrected, thanks Joyce)

A few years ago Old Mutual unit trusts in Kenya had a minimum entry amount of Kshs. 500,000 ($7,462). Last September, they dropped this to Kshs. 200,000 and now they have gone even lower.

Old Mutual Kenya has launched the Toboa Investment Plan which costs just Kshs. 7,500 ($112) per month to start other funds in the family are money market and balanced fund. Speakers at the launch included Deputy Prime Minister Musalia Mudavadi, NSE CEO Chris Mwebesa, CMA CEO Stella Kilonzo, the new boss of Old Mutual Kenya, and Laura Chakava head of Old Mutual Assets in Kenya – who all spoke of the need for affordable collective investment schemes in the country

– Mudavadi said that while local government act mandated that the town councils should have savings and capital funds to cater for unexpected expenses, these are largely ignored – with only 40 of the 175 councils able to comfortably pay their salaries. Also high savings are a part of Vision 2030, but Kenyan savings rates which were already below the average of other African countries, were dropping
– Mwebesa lamented the 1.5 to 1.8 million CDS account holders in the country; the number is un-serviceable (mailing budget for statements of the CDSC costs almost $1m per year – and this compared unfavorably to account holder level in South Africa (100,000) and Brazil (500,000). He said more people should access the market through collective investment schemes such as unit trusts but whose entry levels had been high (elitist) until now
– Kilonzo and Mwebesa both alluded to a recent survey on investors (June 2008) that showed the level of investor education in teh country was not good. Most people relied on the media for share investment information, and were ignorant of the risks of investing in shares.
– Chakava said Kenyans have appetite for investment as shown in the IPO queues and pyramid schemes. OM now gives them an affordable, professionally managed vehicle for investment beyond the unpredictable buy low, sell high mantra that most investors try and follow.

Toboa will invest in fixed income, equities and off shore. OM, which pioneered unit trusts in Kenya, manages about Kshs. 10 billion, but CIS only control about 2% of the NSE. Other OM trusts have an initial fee of about 3 – 7% and annual fee of 2%, the Toboa will probably be slightly higher than this and will use Posta (post office) outlets to collect payments.

Edit: Interesting discussion on Old Mutual investment plans from the Stockskenya forum