Capital Markets

Amana unit trust tumbles 44pc in the first quarter

amana

Investors during a briefing. Amana now has a market share of 0.23 percent. PHOTO | DIANA NGILA | NMG

charlesmwaniki_img

Summary

  • Capital Markets Authority (CMA) industry data shows the fund shrunk by 44.2 percent in the first quarter of the year, by far the biggest loser in the 19-player industry which only saw four firms shrink their assets under management in the period.
  • Amana Capital has been struggling with investor exits after freezing access to funds due to the exposure to the Nakumatt paper, where it had invested Sh275 million or 20 percent of its assets.

Amana Unit Trust fund’s assets under management fell to just Sh75.6 million by the end of March as investors continued to exit the fund that has paid a heavy price for investing in the commercial paper issued by collapsed retailer Nakumatt Holdings.

Capital Markets Authority (CMA) industry data shows the fund shrunk by 44.2 percent in the first quarter of the year, by far the biggest loser in the 19-player industry which only saw four firms shrink their assets under management in the period.

Amana Capital has been struggling with investor exits after freezing access to funds due to the exposure to the Nakumatt paper, where it had invested Sh275 million or 20 percent of its assets.

Nakumatt defaulted on the commercial paper holders among other classes of creditors, sparking major write-offs among banks, suppliers, insurance firms, and high-net-worth individuals.

“Amana Unit Trust funds recorded the highest decline of funds managed by 44.17 percent, reporting Sh75.59 million in March 2021 from Sh135.39 million reported in December 2020,” said the CMA in its second-quarter 2020 statistical bulletin.

The firm was managing Sh1.38 billion worth of investor funds at the start of 2018, meaning that it has shrunk by 94.6 percent in just over three years.

CMA data shows that Amana now has a market share of just 0.07 percent, only beating Wanafunzi Investments which has a total of Sh 551,743 in assets under management. At the beginning of 2018, Amana was the ninth-largest unit trust fund with a market share of 2.4 percent.

Overall, the collective investment schemes sector recorded a 6.1 percent increase in the first quarter of the year to Sh111.09 billion from Sh104.7 billion at the end of December 2020.

CIC Unit Trust held the largest market share at 40.3 percent, equivalent to Sh44.8 billion, followed by Britam Unit Trust at 12.7 percent (Sh14.2 billion), NCBA Unit Trust’s 12.25 percent (Sh13.6 billion), and ICEA Unit Trust at 10.66 percent (Sh11.8 billion).

The schemes continued to invest the bulk of their assets in government bonds and fixed deposits, which accounted for 44.4 percent and 41.07 percent of total assets under management, respectively.

Listed shares accounted for 5.5 percent of the assets, while cash and demand deposits accounted for 4.5 percent.