BY NBM CORRESPONDENT
Investing in the capital market just got easier after Pan Africa Asset Management launched the lowest priced unit trusts in the market. For just Sh2,500, you can invest in any of its three unit trusts and start earning quarterly interests. Pan Africa Asset Management (PAAM) said the facility targets Kenya’s largely non-saving population.
“The average Kenyan does not have much appetite for investment which is why we have given them something to whet that appetite,” said PAAM CEO Kennedy Mureithi. “Essentially, we are targeting the common person, but we also expect that the big money will come in as well.” The unit trusts – branded as Pesa+, a money fund, Pata+, a dividend fund and Chama+, a balanced fund – will grow its customers’ wealth and increase participants in the domestic capital market.
Pan Africa Asset Management has kept the fees charged on investing at an average of 3% per annum, while making it possible for investors to send their Sh1,000 minimal contributions and withdrawals via M-Pesa. The CEO said the market had so far responded well to the introduction of the low price unit trusts.
The unit funds investment option has been out of reach for the majority of Kenyans with most schemes maintaining as much Ksh50,000 minimum deposit, a factor that Mr Mureithi believes has contributed to keeping the combined investment in unit trusts at only Ksh35.3 billion. “The uptake of unit trusts remains very low, despite on average the relatively higher returns historically compared to substitute investment alternatives. In ball pack numbers, our entire unit trust industry would hardly compare to an emergent tier 2 bank in our market,” said Mr Mureithi during the launch in a Nairobi.
Pan Africa started its Pan Africa Units Scheme division in October after receiving the Capital Markets Authority approval.
Meanwhile, to increase uptake of its investment products, UAP Investments Limited, one of the newest fund management firms in the market, is offering competitive returns on its suite of products.
General Manager Peter Ng’eno said investors putting funds in UAP Investments’ Money market portfolio will benefit from one of the highest interest rates in the market. Currently, unit trust funds in Kenya attract returns of between 8% and 11% annually and UAP Investments is offering above these rates. As at 15th December UAP Effective annual rate for money market fund was 11.24%.
“Kenyans have shown great interest in our fund management services which we only rolled out this year and this has informed the move by UAP Investments to reward them with competitive and stable returns ahead of the Christmas celebrations,” said Mr Ng’eno, adding that the positive response in the market has been occasioned by increased financial literacy among the youths and Kenyans in the diaspora seeking more alternative investment options.
“The diaspora community is now looking beyond the traditional investments avenues such as real estate and opting for other areas like the capital market which they see to be more transparent,” he said.
According to Ng’eno, the investment objective of the UAP Money Market Fund is to maximise the level of total return to investors by generating a reasonable level of current income and maximum stability for the money invested.
He added that the Money Market Fund is designed for investors who are looking for competitive returns for their funds and has increasingly become more popular with individual Kenyans and investment groups keen on growing their money to achieve short and long term objectives like building capital to put a house deposit or buy land, going for holidays, weddings, school fees and investments among others.
Currently, UAP Investments has over Sh11 billion assets under its management even though the firm has been in existence for less than a year. The company is now looking to grow this number further by offering its investors even more competitive rates.
“Kenyans and especially youths are more and more considering options like unit trusts rather than putting money in fixed deposit accounts, a move that’s responsible for the increased growth of the fund management sector in the country,” Mr Ng’eno said.
The UAP Investments arm was launched in late July 2014. To ensure utmost level of service integrity and transparency, UAP Investments implemented a state-of-the-art Investment Administration and Fund Management Application that enhances the efficient execution of investment decisions and administration of client investment accounts.
In addition to this the client funds are held by a custodian with an international presence.
According to Mr Ng’eno, UAP Investments money market fund targets individual clients who are typically seeking a higher return than what they would otherwise be able to attain from a normal bank/savings account. “The fund is also suited to corporate clients with surplus liquidity from which they would earn competitive interest rates prior to deployment,” he said.
UAP Investments recommends an investment horizon of three to 12 months in order for clients to be able to appreciate the effect of the returns on their invested capital. “Our minimum initial investment is Sh250,000 which is payable in lump sums of Sh50, 000 or monthly installments of Sh12,500 for 12 to 18 months,” said Mr Ng’eno.”
