By MOSES MICHIRA
Posted Monday, September 6 2010 at 00:00
Madison Asset Management has entered the unit trusts fund market, setting stage for heightened turf wars.
The company is seeking to tap into the growing collective investment schemes sector, that has lured many players including insurance companies in search of new revenue streams in a cutthroat market.
The Capital Markets Authority (CMA) granted he fund manager approval last week.
“CMA has approved the application by Madison Asset Management Services Limited for consent to register Madison Unit Trust Funds,” said the markets regulator in a statement.
A unit trust fund is an investment scheme that allows individual and institutional investors to invest in a portfolio of securities through a professionally managed fund, for a return.
This brings to 12 out of the 18 licensed fund managers that operate collective investment scheme in a market that is estimated to be worth about Sh20 billion.
Mr Joshua Njeru, general manager at Madison Asset Management said the license will enable the firm to tap wealth management for the general public through unit trust that the fund management license does not guarantee.
“Registration of our unit trust means that Madison Asset Management will be able to generate extra income by managing wealth for the general public,” said Mr Njeru.
Asset management firms associated with insurance companies are industry leaders as they have a head start against competition since they have the parent company’s premium collections to manage in addition to those from outsiders.
Madison hopes to replicate the success the unit trusts have had for asset management firms backed by insurance companies including Old Mutual, British American and ICEA Asset management.
“We have a target of managing assets worth Sh2 billion within two years,” said the general manager, adding that they will be available to the investing public before the end of the year.
Through unit trust funds, investors are able to buy into a wide category of securities including stocks, bonds and other money market instruments.
The insurance industry is estimated to be holding gross premiums amounting to Sh64 billion while the asset management sector has Sh300 billion excluding the National Social Security Fund.
At Sh20 billion, Mr Njeru says that the market is too small for the 12 licensees, but notes that the sector is banking on the premise that the diversification offered by collective investment schemes will offer increased interest among the investing public.
“We are confident that despite this being a small market, it has a huge growth potential as more investors are seeking to diversify their investment across different securities,” said Mr Njeru.
From Business Daily published on Monday, September 6 2010 at 00:00
