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Licensed unit trusts hit 55 on rising investor interest
Unit trusts/collective investment schemes have proved to be popular investment vehicles, especially among individual investors, due to advantages, including ease of entry and a low minimum investment requirement.
The number of licensed unit trusts or collective investment schemes grew by 19 last year to hit 55 on the back of rising retail investor interest.
In a unit trust, investors’ funds are pooled and used to invest in a portfolio of securities and other financial assets. The beneficial interest in these assets is divided into units, which represent the investors’ ownership stake in the trust.
These funds are typically managed by a professional fund manager.
Unit trusts make up the largest pool of licensed vehicles in Kenya’s capital markets ahead of other investment classes, including real estate investment trusts (Reits) and employee share ownership plans (Esops).
“The number of licensed institutions in capital market operations rose from 210 in 2023 to 247 in 2024. The increase was primarily attributed to an increase in the number of licensed collective investment schemes from 36 to 55 in 2024,” the Kenya National Bureau of Statistics (KNBS) says.
Unit trusts/collective investment schemes have proved to be popular investment vehicles, especially among individual investors, due to advantages, including ease of entry and a low minimum investment requirement.
Interest in these instruments has seen fund managers move to establish more unit trusts, including dollar-denominated units.
The number of fund managers has also been on the rise amid the surge in unit trusts, hitting 42 last year from 40 in 2023 and 34 in 2022.
The assets under management (AUM) of the unit trusts have also steadily grown to reach Sh389.2 billion in December 2024 from Sh215.1 billion a year prior.
The number of unit trust investors neared the 1.5 million mark at the end of 2024, a growth which the capital markets regulator attributes to increased investor awareness.
“The number of investors in the various CIS funds has continued to grow steadily over time, buoyed by increasing awareness in the market to save and invest especially, post-Covid era,” the Capital Markets Authority (CMA) says in its latest market soundness report.
“As of December 31, 2024, there were a total of 1,409,343 investors, this represents a seven percent increase from 1,299.300 investors in June 2024.”
Money Market Funds (MMFs), a subcategory of unit trusts that invests primarily in Treasury bills and commercial bank fixed deposits, remain the most popular form of unit trusts.
The MMFs had an asset base of Sh246.8 billion in December 2024, compared to Sh66.7 billion for fixed income funds, which invest in long-term government bonds.
Other types of unit trusts include equity funds, which primarily invest in listed equities, and balanced funds, which have an equal weighting of investment securities.
Unit trusts can also be differentiated by currency denomination, with the US dollar being the most popular outside of the Kenyan shilling.
CIC Unit Trust Scheme was the largest unit trust as of December 2024, with an asset base of Sh82.4 billion, ahead of Sanlam and Mansa X Special Fund, whose asset sizes were Sh62.7 billion and Sh41.6 billion respectively.
