Quarterly unit trust inflows rise to a near record

by Edward West, 29 April 2013, 19:57
Article from http://www.bdlive.co.za/business/financial/

UNIT trust inflows reached their second-highest quarterly level in the first quarter, owing to strong investor confidence, the Association for Savings and Investment SA (Asisa) said on Monday.

The collective investment schemes industry attracted R47bn in the first quarter, with the highest amount reported in one quarter being R63bn in the third quarter of last year. The third-highest amount was R41bn in the fourth quarter of last year.

Asisa represents most of South Africa’s asset managers, collective investment scheme management companies, linked investment service providers, multimanagers and life insurers. Among them they hold assets under management of more than R4-trillion.

Asisa senior policy adviser Peter Blohm said the record inflows meant that savers were saving more than ever and receiving a good net real return from their unit trust investments.

Three successive quarters of record-breaking net inflows for unit trusts, and other local collective investment schemes, resulted in the highest net inflows for any rolling 12-month period. Net inflows for the year to March 31 came to R166bn.

Asisa CEO Leon Campher said that at the end of the first quarter, the local collective investment schemes industry managed assets of R1.28-trillion and offered investors 988 funds. Total assets under management at the end of December stood at R1.2-trillion.

Mr Blohm said there had also been a shift from fixed-interest investments into equities, in a search for higher yields.

Mr Campher said assets under management had almost doubled over the past five years. At the end of March 2009 assets under management were R611bn.

Mr Campher said the bulk of the inflows in the 12 months to March 31 came directly from investors (27%) or were channelled via intermediaries (35%). This meant that more than 60% of inflows consisted of retail money.

Linked investment services providers generated 21% of sales, and 17% of sales were received from institutional investors such as pension and provident funds.

Investors favoured funds in the South African multi-asset category in the first quarter, said Mr Campher. At the end of March, this category held 44% of industry assets. In the first quarter of this year local multi-asset funds attracted R26.2bn in net inflows.

South Africa’s multi-asset category is made up of: the income subcategory, low equity, medium equity, high equity, and flexible.

South African multi-asset, low-equity funds proved most popular with investors, attracting R12bn of inflows in the quarter.

The South African interest bearing short-term category was favoured by investors looking for higher yields than those of cash investments in the low interest-rate environment. These funds attracted the second-highest inflows in the quarter of R9bn.

Mr Campher said only 25% of assets were invested in pure equity and real estate funds at the end of last month. "Investors prefer multi-asset funds because they make it possible to achieve diversification across asset classes within one fund," he said.

Edward West, 29 April 2013, 19:57
Article from http://www.bdlive.co.za/business/financial/

Bifm reports rush for unit trusts

MBONGENI MGUNI
Staff Writer
Article from http://www.mmegi.bw/index.php?sid=4&aid=28&dir=2013/May/Friday10

Local asset manager, Bifm says retail and institutional investors have responded strongly to its recent launch of four unit trust products, signalling the market's hunger for safe, liquid and lucrative investment pathways.

Bifm's recent launch of Money Market, Balanced Prudential, Equity Fund and Offshore Fund unit trusts also came as some retail investors licked the wounds from a recent explosion of investment scams.On Wednesday, Bifm Head of Retail Setshwano Ngope told BusinessWeek the response to the local financial market's newest products had been "overwhelming".

"We are seeing overwhelming response from both institutional and retail investors, the latter ranging from the working class, to older people who are close to retirement and others who have already retired," she said."As much as we know that financial literacy is low in the market, we also know that there are investors who have money and don't know where to go.

While some may think that those who get involved in Ponzi schemes are stupid, we see it as a cry for help from them to say 'we have money to invest but we don't know how to go about it.'"At last week's launch, Bifm CEO Tiny Kgatlwane described unit trusts as an ideal investment opportunity for Batswana, "especially those that previously could not afford to invest large amounts in blue chip shares".

Ngope said institutional investors were also drawn to the unit trusts, viewing them as an alternative investment vehicle for excess cash that would normally be deposited in call or fixed deposit accounts.The strong response to the unit trusts is important, as NBIFRA's licence for asset firms to offer such products requires that the pooled fund reach a pre-determined size within a specific time frame.

Should a fund manager fail to reach the agreed milestones, it would have to return cap in hand to NBFIRA or face the possibility of losing its licence to operate a unit trust.Ngope revealed that Bifm acquired its licence last year and had already gathered momentum in the new product.

"We received our licence last year and our shareholder invested as well as our own staff members, as a pilot," she said."The unit trusts have thus been running in the background although they had not been officially launched until last week. We will soon be publishing prices of the units in the very near future, as the legislation requires that we do so."

The Bifm executive said there was space in the local unit trust market for the new products, as there had been growth in fund managers and products, since the first unit trust was launched 11 years ago."I would be surprised if we are the last entrant in the market," Ngope said.

"As much as there's a shortage of instruments in the market, I believe we will continue to find opportunities regardless of the size or choices. Over the years, there has been a push for more funds to be invested domestically and I expect that to boost the market and for more instruments to be issued."

She added that the uptake of financial products such as unit trusts would continue rising as financial literacy levels improved. Bifm plans to engage potential investors further to educate them on the various products available to them.

MBONGENI MGUNI
Staff Writer
Article from http://www.mmegi.bw/index.php?sid=4&aid=28&dir=2013/May/Friday10

Why Unit Investment Trusts Can Be A Good Investment Alternative

Kevin Mahn, Contributor
4/22/2013 @ 1:58PM
Article from http://www.forbes.com/sites/advisor/2013/04/22/why-unit-investment-trusts-can-be-a-good-investment-alternative/

According to the Investment Company Institute (ICI), data on the market value of unit investment trusts (UITs) issued and outstanding as of year-end 2012 indicates a total of 5,787 trusts with a value of $71.73 billion. According to reports submitted by the major sponsors of UITs to ICI, at year-end 2012 there were:

• 2,808 tax-free bond trusts, with a market value of $15.76 billion
• 553 taxable bond trusts, with a market value of $4.06 billion
• 2,426 equity trusts, with a market value of $51.91 billion.

Over the last 5 years, while the number of UITs outstanding decreased from 5,984 to 5,787, total net assets invested in UITs have grown by more than 151%, starting at approximately $28 billion at the end of 2008 and finishing at the aforementioned $72 billion at the end of 2012.

Unit Investment Trust (UIT) Total Net Assets (Millions of Dollars, Year-End)

                    Source: Investment Company Institute, April 2013

The popularity of UITs in recent years can be attributed to a number of factors, one of which is that many of the more popular UITs have primary investment objectives oriented towards current dividend income.

These same UITs can invest in income producing securities that can tend to pay a higher level of current income when compared to more traditionally recognized income producing securities (i..e bonds). Such income producing securities can include, but are not limited to, closed-end funds (that may or may not employ leverage), preferred stocks, real estate investment trusts (REITs), business development companies (BDCs), master limited partnerships (MLPs) and dividend paying equities.

These strategies have been particularly appealing within an interest rate environment with persisting record low yields of fixed-income/debt securities.

For those who are not completely familiar with UITs, the following summary information may be beneficial to help better understand this product type.

• Unit Investment Trusts (UITs) are a fixed portfolio of stocks, bonds or other securities. These types of portfolios allow investors to know what securities are held within a UIT as of the date of deposit, as well as the mandatory termination date of the trust. While it is not common, a trust may terminate early as described in the prospectus.
• UITs offer an attractive opportunity for investors to own a portfolio of securities via a low minimum, typically liquid investment. As a point of contrast, while many actively managed funds continually buy and sell securities, thereby changing their investment mix, the securities held in a UIT  generally remain fixed.
• Some UIT securities are chosen according to a quantitative selection process determined by a sponsor while some are based on an index. Other UITs are chosen by experienced analysts or portfolio managers, who research the securities and screen them for various characteristics, according to specific objectives. Once securities are selected, the UIT portfolios are then supervised accordingly throughout the life of the trust.
• While it is rare, a security held in a UIT may be removed from a portfolio under certain circumstances, such as a significant decline in credit rating. By and large, securities held in a UIT remain fixed for the life of the trust, regardless of market value.
• At the maturity of a UIT, unitholders generally have three options:
• Option #1: Rollover at a reduced sales charge – At a reduced sales charge, investors  may roll over into a new series of the same trust, if available or potentially other UITs from the same of different sponsor of UITS,  available in the primary market. It should be noted that maturity rollover is considered a taxable event. Please refer to each trust’s prospectus for complete rollover option information. Investors should be aware that there is a time limit to notify the trustee of the rollover.
• Option #2: Maturity – Unitholders may do nothing and allow the portfolio units to mature. The trust will liquidate and the unitholder will receive a cash distribution of the trust’s proceeds, if any.
• Option #3: In-kind distribution - Unitholders may generally request an in-kind distribution of the securities underlying the units if they own 2,500 or more units at either the time of purchase or maturity. Please see additional provisions set forth in the prospectus of each Trust in this regard.
• Typical minimums for UIT purchases are 100 units; however, the minimums may vary based on the type of UIT. Higher minimums may also be required by each respective brokerage firm.
• Unitholders may sell all, or a portion of, their units any day the stock market is open. These unitholders will receive the then-current net asset value of the units, based on the current market value of the underlying securities in the portfolio, less any remaining deferred sales charge, as of the evaluation time. As the market fluctuates, of course, so will the value of your units. Therefore, units may be worth more or less than what the unitholder originally paid.
• UITs are priced at the end of each business day similar to mutual funds. The price is based on the market value of the underlying securities and includes cash and other assets and liabilities held by the trust.
• UITs are available in a sales charge structure for commission accounts as well as for fee/wrap accounts. It is best to check with each individual brokerage firm to see if UITs are eligible for purchase on their fee/wrap platform.
• Unit investment trusts are one of three basic types of investment companies. Investment companies are subject to stringent federal laws and oversight by the U.S. Securities and Exchange Commission (SEC). It is important to note that the SEC does not approve or disapprove of UITs or the securities within a given UIT or pass upon the adequacy of any prospectus for a given UIT. Investment companies are regulated primarily under the Investment Company Act of 1940. This federal statute is highly detailed and governs the structure and day-to-day operations of investment companies.    Investment companies are also subject to regulations of the Securities Act of 1933, FINRA, and the Securities Exchange Act of 1934.

I encourage all investors to educate themselves on all aspects of UITs, including risks and expenses, in addition to understanding each UIT’s investment strategy in particular before considering an investment.

Disclosure:  Hennion & Walsh is the sponsor of SmartTrust® Unit Investment Trusts (UITs). For more information on SmartTrust® UITs, please visit www.smarttrustuit.com.  The overview above is for informational purposes and is not an offer to sell or a solicitation of an offer to buy any SmartTrust® UITs.  Investors should consider the Trust’s investment objective, risks, charges and expenses carefully before investing. The prospectus contains this and other information relevant to an investment in the Trust and investors should read the prospectus carefully before they invest.

Kevin Mahn, Contributor

4/22/2013 @ 1:58PM

Article from http://www.forbes.com/sites/advisor/2013/04/22/why-unit-investment-trusts-can-be-a-good-investment-alternative/

Genghis Capital targets mass market with Sh500 unit trust

Genghis Capital Limited head of unit trusts Theresa Kaleja, managing director Zafrullah Khan and director Ali Cheema during the unveiling of a unit trust aiming to reach the mass market at the Crown Plaza, Nairobi. Photo/Diana Ngila 

By George Ngigi
Posted  Thursday, April 25  2013 at  18:46
From http://www.businessdailyafrica.com/


IN SUMMARY

• The Sh500 unit trust deepens competition for retail investors in unit trusts.
• Fund managers have over the past three years strived to attract small investors to unit trust schemes by lowering the minimum investment.
• Unit trusts have been a preserve of investment banks, with Genghis Capital being the first stockbroker to offer the product.

Stockbrokerage firm Genghis Capital has opened a unit trust aiming to reach the mass market with a Sh500 minimum investment plan.

The minimum investment amount deepens competition for retail investors in unit trusts, where Zimele Asset Management’s Sh250 and Old Mutual’s Sh1,000 minimum were previously the lowest entry points.

Fund managers have over the past three years strived to attract small investors to unit trust schemes by lowering the minimum investment amount from upwards of Sh100,000.

Genghis Capital will also be reaching out to Muslims with a sharia- compliant investment vehicle dubbed Gencap Imam Fund.

The stockbrokerage firm, a subsidiary of Chase Group, plans to ride on the geographical reach of its banking arm and on its micro lender Rafiki Deposit Taking Microfinance to sell unit trusts to the mass market.

“We are aware of the fixed costs but we are banking on high volumes. Most people have been asking for better rates than those being offered by the banks,” said Dr Theresa Kaleja, head of Unit Trust at Genghis Capital.

Unit Trusts provide investors an opportunity to invest in a portfolio of stocks or fixed-income securities or both, without directly going to the market themselves. The investors deposit funds with fund managers, who charge them a fee for their services.

Genghis will charge a one-off initial fee of 3.5 per cent, which it will use to settle fees charged by its service providers who include custodians, fund managers and trustees. It will also levy an annual management fee of two per cent.

Unit trusts have been a preserve of investment banks, with Genghis Capital being the first stockbroker to offer the product. The management, however, said it plans to convert the brokerage firm into an investment bank.

(Read: Genghis Capital now starts selling Shariah unit trust)

“By end of year we will have converted into an investment bank. We have to raise capital in order to comply with the regulatory requirement, which we will do from our own funds and fresh capital,” said Zafrullah Khan, the group chairman.

Initially, there were fears of entry into unit trusts due to the high administrative costs but entry of players such as Zimele Asset Management has proved that the retail segment offers a good bargain.

“That is where the potential of unit trust lies as high net worth guys have other means of accessing the market,” said Isaac Njuguna, head of investments at Zimele.

Zimele has a minimum investment option of Sh250 which can be deposited through M-Pesa.

The shariah compliant Iman Fund set up by Genghis has received exemption from the regulator to exceed the 10 per cent cap put on foreign investment.

The fund can invest up to 30 per cent of its portfolio in stocks listed on the Nairobi Securities Exchange (NSE), 60 per cent in unlisted securities and 30 per cent in offshore investments.

Unit trusts generally provide higher returns on savings than bank deposits, but equity funds can also result in losses of initial investments. Currently banks’ savings accounts are yielding an average of 1.65 per cent and 6.5 per cent for the fixed deposit account.

Unit trusts split their funds according to the risk appetite of the contributor, with money markets — composed of Treasury bills and bonds — being for those who are risk averse and equity markets for those who are willing to commit money for longer and are willing to take more risk.

Currently the returns from the money markets are above 10 per cent, with the one year T-bill closing at 12.5 per cent in the last auction. 

The equities market has also been vibrant up 15.6 per cent since the beginning of the year.

With the minimum investment in a government securities set at Sh50,000, the pooling of cash from the mass market allows them into a market that they would not access individually.

Investment of huge sums in the equities market also gives the fund managers bargaining power on fees and prices.

gngigi@ke.nationmedia.com

By George Ngigi
Posted  Thursday, April 25  2013 at  18:46
From http://www.businessdailyafrica.com/