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Capital Markets

New disclosure rules for pooled investment funds

CMA Acting chief executive Wycliffe Shamiah
CMA Acting chief executive Wycliffe Shamiah. FILE PHOTO | NMG 

Financial companies pooling client cash for investments have been handed new directives to disclose where they put client money, how they value their assets and make regular reports from January 2020.

The guidance for Collective Investment Schemes restricts money market funds to only put money in instruments with a tenor of 13 months.

Equity funds of fixed income funds will invest 80 percent of their portfolios in the respective classes.

For a mixed fund with money market, fixed income and equities portfolio, the companies will not be allowed to put more than 60 percent in one class.

The funds will make quarterly reports to the regulator and external valuations for real estate investments will be performed by an independent registered property valuer at least once every three years.

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CMA Acting chief executive Wycliffe Shamiah said the regulator had developed a standard reporting model to ensure investments held by these companies reflect their market value.

“In determining the total assets under management, fund managers will consider: - the aggregate fair value of all assets without double counting any assets, actual assets managed by the fund manager including fee-paying and non-fee-paying portfolios and assets outsourced to another fund manager,” Mr Shamia said.

Licensed collective investment schemes held a cumulative Sh76.3 billion in assets under management as at March this year.

Money market funds accounted for 88.35 percent of all the funds under management followed by equity funds at five percent and fixed income at two percent, while other funds made up five percent.

CMA wants a clearer picture of where collective investments schemes have invested clients’ cash as well as the terms of those deals following revelations of investment gambles that have lost investors billions.

Recent developments have put in question the oversight on where the money is invested by supposed expert funds especially after some of the firms reportedly lost billions to collapsed or struggling businesses including Nakumatt, Athi River Mining, Chase Bank and Imperial Bank.

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