The market can at time feel like a vast, overwhelming force that’s difficult to comprehend. In order to successfully navigate through your investments, you'll need to make important decisions on a variety of issues. To help you tackle some of these hurdles, we have collated and simplified the publicly available information for you.
The Guidance to Fund Managers of Collective Investment Schemes (CISs) on Valuation, Performance Measurement and Reporting (Guidance) took effect on 1 January 2021 and is expected to entrench international best practice in the capital markets by standardizing investment performance measurement and presentation by collective investment schemes.
The Capital Markets Authority (CMA) has placed a 28-day freeze on the withdrawal of funds from Amana Capital to cushion it amid reports that it lost Sh275 million in a commercial paper of the failed Nakumatt Holdings.
The first-ever student’s unit trust fund in Kenya was launched in under the name Wanafunzi Investment Unit Trust Fund. The fund is regulated by the Capital Markets Authority and managed by Nabo Capital with KCB Group as the custodian bank.
In 2018, Genghis Capital limited acquired the Asset Management license.
The Gencap Hela Imara Fund was established and is governed by trust deed dated 1st May 2017 as a money market fund.
Equity Investment Bank Money Market Fund, a unit trust established under the Capital Markets (Collective Investment Schemes) Regulations, Cap 485A of the laws of Kenya, by Trust Deed dated 26th January 2015 between British-Americn Asset Managers Limited as the Fund manager and Kenya Commercial Bank Limited as trustee.
Centum Asset managers Ltd was granted approval by the Capital Markets Authority (CMA) to register the Centum Unit Trust Fund as a Collective Investment Scheme in accordance with section 30 of the Capital Markets Act and Part II of the Capital Markets (Collective Investment Schemes) Regulations, 2001. The Fund ( Centum Unit Trust Fund ) will invest in Sub Saharan African public markets, providing our clients with access to a wide basket of truly diversified investments.
Sanlam Unit Trusts Funds was established under Capital Markets (Collective Investment Schemes) Regulations, Cap 485A of the laws of Kenya, by trust deed dated 8th January, 2014 made between Sanlam Investments East Africa Limited as Manager and Stanbic Bank Limited as Trustee.
Genghis Capital limited launched GenCap Unit trusts in the year 2013.
Genghis Capital aquired Nominated Advisor (NOMAD) licence for Growth and Enterprise Market Segments (GEMS) in the year 2013.
The Gencap Hela fund was established, and is governed by a trust deed dated 1st December 2012 as a money market fund.
The Gencap Hazina fund was established, and is governed by a trust deed dated 1st December 2012 as a bond fund.
The Gencap Hisa fund was established, and is governed by a trust deed dated 1st December 2012 as an equity fund.
The Gencap Eneza fund was established, and is governed by a trust deed dated 1st December 2012 as a diversified fund.
The Gencap Iman Fund was established, and is governed by a trust deed dated 1st December 2012 as a Shari'ah compliant fund.
CIC Unit trust scheme was established, and is governed by a Trust Deed dated 6 January 2011 as a CIC unit trust scheme.
Amana Capital Ltd Launched Amana Unit trust scheme in 2010, specifically targeted at investors of moderate means with the lowest account opening amount at the time.
Amana Unit Trust Funds Scheme was established and is governed by an irrevocable Trust Deed dated 10th September 2009.
CIC Asset Management Ltd (CICAM)was licensed as a fund manager by the Capital Markets Authority, Kenya in June 2009
he Fund Managers Association (FMA) was established in 2008, as a Kenyan trade association to promote
responsible and sustainable asset management. Membership in the Association is open to Capital Markets
Authority (CMA) licensed organizations who manage institutional or individual investors’ funds.
The FMA supports its members and clients by actively engaging with policy makers, regulators,
and other stakeholders through discussions and submission of ideas, proposals and concerns. These include
the raising of ethical standards, development of new products, implementation of new regulations and
training requirements.
Zimele Unit trust Balanced Fund began operations on 1st March 2007, Is registered under the Capital Markets
Act and is Domiciled in Kenya.
Zimele Unit trust Money Market Fund began operations on 1st March 2007, Is registered under the
Capital Markets Act and is Domiciled in Kenya.
British-American Balanced Fund , launched on 4th April 2006, is a fund that invests in listed companies and
fixed income securities with a bias towards equities offering long term value.
British-American Bond Plus Fund, launched on 4th April 2006, is a low risk fund that invests in
interest bearing securities, and other securities that are consistent with the portfolio's investment policy.
British-American Equity Fund, launched on 28th April 2006, is a fund that primarily invests in
companies listed in the regional stock Exchanges which showabove average prospects of growth.
British-American Money Market Fund, launched on 1st January 2006, 1s a fund that invests in interest-bearing securites and other short term money market instrunments
he Capital Markets Authority through the Capital Markets Act Cap 485 A is empowered to regulte both the
funds and the funds’ service providers. And also through the Capital Markets (Collective Investment Schemes)
Regulations, 2001
The Collective Investments Schemes Regulations, 2001 indicates that provisions done in the Trust
deed relating to unit trusts should be consistent with any provision in the regulations as well as in the
Capital Markets Act.
Zimele Unit trust scheme fund manager was founded in August 1998 as a co-operative society under the name
Zimele Multi-Purpose Co-operative Society Ltd
Zimele Asset Management Company Limited is licensed by the Retirement Benefits Authority (RBA) to
provide pension scheme fund management services and by the Capital Markets Authority (CMA) as a fund manager
and investment advisor.
In November 1989, the bill was passed in parliament and subsequently received Presidential assent (The Capital Markets Authority was set up in 1989 through an Act Parliament (Cap 485A,Laws of Kenya). The Authority was eventually constituted in January 1990 and inaugurated on 7th March 1990. The CMA is a regulating body charged with the prime responsibility of supervising, licensing and monitoring the activities of market intermediaries, including the stock exchange and the central depository and settlement system and all the other persons licensed under the Capital Markets Act.
ICEA LION Asset Management Limited (ILAM) was incorporated in 1985 thus making the firm one of the oldest fund managers in Kenya with 35 years of fund management experience.ICEA LION Asset Management Ltd (ILAM) is a subsidiary of a large stable Financial Services Group, ICEA LION Holdings with footprint across East Africa.
The first law that defined collective investment schemes was the Unit Trusts Act of 1965 which was used
when the first unit trusts were set up in the 1990s and remained applicable until 2000.
The Unit Trusts Act of 1965 in Kenya is a piece of legislation that established the legal
framework for the operation of unit trusts in the country. The act provides the regulatory framework for
the creation, administration, and management of unit trusts, which are investment schemes that pool money
from multiple investors to purchase a portfolio of assets, such as stocks, bonds, and real estate.
The act defines the responsibilities of unit trust managers, sets standards for the calculation
and disclosure of trust performance, and establishes guidelines for the distribution of trust income to
investors. The purpose of the Unit Trusts Act is to protect the interests of unit trust investors and
promote the growth of the unit trust industry in Kenya.
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Collective Investment Schemes.
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Collective Investment Schemes
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Money Market Funds
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Fixed Income Funds.
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Equity Funds.
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Other Funds
A collective investment scheme in which investors’ contributions are pooled together to purchase a portfolio of financial securities, such as equities (shares), bonds, cash, bank deposits etc. The portfolio is managed by professional fund managers.
Investors contributions/investments into the Pool of funds (unit trust) are used to purchase units. Each unit represents an equal fraction of the total value of the pool of invested money.
When an investor makes an initial investment or makes an additional investment, Units are usually purchased from the fund manager and sold back to the fund manager when a unit holder need to redeem their investments (in this case), units.
The number of units allocated to an investor is calculated by dividing the amount the investor invests by the offer price at the time. As an example, if the offer price for each unit is Kshs 1, an investment of Kshs 10,000 will buy 10,000 units.The value of units moves in accordance with the performance of the unit trust’s assets.
A unit trust has a trust framework.
* The funds are set up to safeguard investor’s money by separating the various functions among the fund manager, custodian, trustee and auditor.
* Unit holders investment and assets purchased are safely held in a custody account overseen by a custodian (usually a CMA approved bank or financial institution).
* The Capital Markets Authority (CMA) ensures all the above parties play their roles independently, that investors'funds are safe and that only registered professionals are involved with the affairs of the unit trusts.
The following should be put into consideration:
* Your risk profile.
* Your preferred time horizon for the investment.
* Your financial goals – immediate, short, Medium and Long-term, and
* Liquidity- Whether you require regular income or purely looking for capital growth.
Investment returns on a unit trust fund depends on the following:
* Returns from the financial markets,
* The type of assets within the particular fund portfolio, and
* The management skills of the portfolio managers.
The value of equities (shares), bonds and other asset classes that unit trust invests into are determined by financial markets and can rise or fall from time to time. In general, the level of investment return is generally related to the level of risk incurred i.e. the higher the potential risk, the greater the potential return.
You can change any of your static details from;
* bank details,
* postal address,
* signatories,
* beneficiaries etc.,
By sending a duly signed instruction to your fund manager so that they can effect the changes. This applies to all clients. In the case of a corporate account, all signatories MUST sign for the same
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Credit risk is the risk that a counter party will not meet its obligations under a financial instrunment or client contract, leading to a financial loss. Unit trust schemes can be exposed to credit risk from their operating activities (primary investments), including deposits with financial institutions and other financial instrunments.
Liquidity risk is the risk that the scheme will not be able to meet its financial obligations when they fall due. Schemes are required to manage liquidity to ensure, as far as possible, that they will always have signifiacant liquidity to meet liabilities when due without incurring unacceptable losses or the risk of damaging the their reputation.
Market Risk is the risk that the fair value or future cash flows of a financial instrunment will fluctuate because of changes in market prices.
Unit trust schemes may be exposed to price risk as a result of its holdings in quoted debt instrunments investments, carried at fair value through profit or loss.
Interest Rate risk arises primarily from investments in fixed interest securities that are measured at fair value through profit or loss.
This is a financial risk that exists when a unit trust scheme is affected by a variation in the exchange rate between its local currency and the foreign currencies used in financial transactions.
Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When controls fail to operate effectively, operational risk can cause damage to reputation, have legal or regulatory implications or lead to financal loss.
In Kenya, Unit Trusts are regulated by Capital Markets Authority. Only unit trust schemes that are approved by the Capital Markets Authority maybe offered for sale to the Kenyan public. Such schemes must comply with the capital markets Act Cap 485A and also the Capital Markets (Collective Investment Schemes) Regulations, 2001.
All Unit trust schemes operators, such as fund managers and trustees, are required to obtain a license from the Capital Markets Authority before commencing operations. The licensing process involves meeting specific criteria, including capital requirements, fit and proper tests for key personnel, and compliance with regulatory guidelines.
All unit trust schemes must clearly define their investment objectives and strategies in their offering documents, such as the prospectus. The Capital Markets Authority regulates the permissible investments, diversification requirements, and restrictions to ensure prudent investment practices and risk management.
Unit trust schemes operators are mandated to provide investors with comprehensive and accurate information regarding the scheme's investment objectives, fees, charges, risks, performance, and financial statements. This ensures transparency and enables investors to make informed decisions. Regular reporting to the Capital Markets Authority is also required.
The fund manager is responsible for actively raising capital, deploying it and managing the investments to meet the fund's investment goals. The fund manager Manages the investment portfolio of the respective schemes.
The trustee Safeguards all interest of unit holders during operations of Unit Trust Scheme, monitors compliance to Trust Deed.Trustees ensure that the fund managers run the trust following the respective fund's investment goals and objectives.
The CMA approved Custodian, who must be affiliated to a commercial bank effectively holds and safeguards all assets and cash of Unit Trust scheme on behalf of the investors and release the money which is invested by the Fund Manager as per the scheme’s policy.
The role of the auditor is to evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent a true and fair view of the financial position, performance, and cash flows of the unit trust scheme.
The role of the Fund administrator is Administration, Distribution and Marketing of the respective fund.
The role of the regulator is to ensure compliance with the capital markets Act Cap 485A and also the Capital Markets (Collective Investment Schemes) Regulations, 2001.
Fund members Provide financial resources to the fund pool for investment.By providing financial resources to the fund pool, fund members enable the unit trust scheme to achieve economies of scale. Pooling resources allows the scheme to access investment opportunities that may not be available or feasible for individual investors.
These are charges incurred by the unit trust fund.
Service fees are paid to the fund manager for the proffessional management of the fund. The fees are charged at a rate inclusive of taxes per annum, computed on the daily fund balances.
Custody fees are paid the fund's custodian for the custodial services to the fund. The fee is charged upto a set percentage maximum of the funds under management, payable monthly and reviewed on an anual basis.
The fund's trustee is paid an annual fee set as a percentage rate of the market value of the fund accrued daily. The fee is paid monthly and is reviewed on an annual basis.
These are charges incured by the unit trust fund investors.
This is a fee charged on every withdrawal other than the minimum allowed number of withdrawals in a calader month. It is often a fixed amount charged on every subsequent withdrawal to the minimum allowed number of withdrawals.
The annual management fee is usually expressed as a percentage of the net asset value (NAV) of the scheme. This fee covers the ongoing costs of managing the scheme, including administrative expenses, research, and portfolio management.
This is a fee charged on every withdrawal other than the minimum allowed number of withdrawals in a calader month. It is often a fixed amount charged on every subsequent withdrawal to the minimum allowed number of withdrawals.
