Kuza Asset Managers has attained a milestone after assets managed by the new entrant, which include unit trusts and pension plans, hit the Sh1 billion mark within three years of operation.
A unit trust is a collective investment packaged under a trust deed and run by a professional fund manager. A fund manager may choose to invest in bonds or shares on the stock market, and the fund is split into units, which investors purchase—granting them access to mortgages, securities, mortgages and cash equivalents.
The firm joins its peer unit trusts including Etica Capital, Lofty Corban, and GenAfrica that have reached the Sh1 billion mark of assets under management. Kuza runs a variety of funds under its unit trust licence including a money market fund, a fixed income fund, Shariah, private wealth management and pension funds.
Kuza Asset Management Chief Executive Officer James Mose has credited the rise in assets under management for the firm to strong demand from investors seeking enhanced returns from the market.
“Currently, we have 10 products that cater to retail and institutional clients. The performance of these products has largely been positive. We are in the process of introducing an income drawdown fund in the coming months to address the needs of retirees,” he noted.
The fund manager says it's aiming to eat away the estimated Sh2.1 trillion funds sitting in the lower interest-earning current accounts in banks.
Kuza is seeking to ride the wave of high appeal in unit trusts as an investment class among mostly retail clients, which has been enabled largely by technological innovation, round-the-clock customer service, and low entry levels for retail investors.
For instance, the average unit trust requires a minimum investment of Sh500 with no floor on the minimum deposit amount. Similarly, the mean collective investment scheme allows for unlimited deposits and withdrawals by customers, a contrast to the much stricter fixed deposit accounts by commercial banks.
As of the end of March this year, the Capital Markets Authority (CMA) had approved 36 collective investment schemes made up of 150 funds.
About 20 of the schemes had over Sh1 billion in assets under management with CIC Unit Trust Scheme maintaining its market lead in the quarter with a 27.5 percent market share.
Collective investment schemes are pools of funds that are managed on behalf of investors by a professional fund manager.
Investors in the schemes receive units that represent their pro-rata share of the pool of funds of assets through which they earn a return.
Meanwhile, fund managers earn revenues from the clients by charging a fee which usually ranges between one and three percent of the assets under management.
Editor’s note: We have revised the story to indicate that the Sh1 billion mark includes all assets under management by Kuza, not just the unit trusts alone.
