Money Market Funds are growing faster than the overall market
Money market unit trusts are gaining popularity in Kenya attributed to continuous efforts being made to stimulate and deepen the capital markets as a safe, secure and reliable haven for investments.
“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,” explains Elizabeth Nkukuu, Chief Investments Officer of Cytonn Investments Management Plc.
“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 adds.
According to Cytonn Investment’s Full Year 2018 performance by Unit Trust Fund Managers, Unit Trust Funds assets recorded improved growth of 4.3% in 2018, compared to a negative growth of 1.5% in 2017, while growth for bank deposits and pension assets slowed down in 2018 to 11.3% and 9.8% from 12.6% and 18.3% recorded in 2017, respectively.
Bank assets growth was 10.2% in 2018, compared to 10.1% in 2017.
The Unit Trust Fund Managers, in line with section 51A (2) of licensing regulations, released their 2018 results.
Highlights on the performance from FY’2017 to FY’2018:
The Total Assets Under Management (“AUM”) held by Unit Trust Fund Managers grew moderately by 4.3% to Kshs 58.0 bn in 2018 from Kshs 55.6 bn recorded in 2017,
Money Market Funds continue to be the most popular product with the AUM held by Money Market Funds having grown by 8.9% to Kshs 48.5 bn in 2018 from Kshs 44.5 bn recorded in 2017; this shows that Money Market Funds are growing faster than the overall market,
CIC Asset Managers recorded the strongest growth in AUM of 36.3%, to Kshs 20.3 bn in 2018 from Kshs 14.9 bn in 2017,
For the top ten fund managers by AUM, Sanlam Investments recorded the highest decline in AUM of 31.7% to Kshs 1.8 bn in 2018 from Kshs 2.6 bn in 2017,
CIC Asset Managers remains the largest overall Unit Trust Fund Manager with a market share at 34.9% in 2018, up from 26.7% in 2017,
Money Market Funds remain the largest Unit Trust Fund, with a market share of 84.3% in 2018, up from 80.7% in 2017,
The 2018 results do not cover Stanlib Kenya as they had not published their financials as of 31st March 2019 as required by the regulations.
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 launched its Unit Trust Funds including; Cytonn Money Market Fund, Cytonn Equity Fund and Cytonn Balanced Fund.
