Unit trust returns fell marginally in the first 10 months of the year as fund managers adjusted to a tougher investment climate where yields on government securities have remained largely flat and the shilling depreciated against the dollar.
The effective annual returns on a majority of money market funds—which account for 79 per cent of the total industry assets under management (AUM) of Sh55.5 billion— have gone down by between 0.4 and 2.4 percentage points since January, data from respective funds show.
Kestrel Capital head of fixed income Alexander Muiruri says in his latest unit trust analysis that the larger funds have avoided paying more than they need to.
“Based on our survey the average October return on money market funds is 8.38 per cent on an AUM-weighted basis and we noted that the top five funds by AUM posted a weighted return of 6.45 per cent. This implies that annualised returns between large and small funds alike aren’t paying any more than they need in the fight to build AUMs,” he said.
Among the larger funds, Madison Asset has recorded the largest decline in return by 2.4 percentage points to nine per cent as at November 2, followed by Equity Investment Bank, lower by 2.4 percentage points to 3.4 per cent and CIC at 1.6 percentage points to 9.8 per cent.
Returns could, however, be set for improvement before the end of the year given that Treasury bill yields rose across the three tenors last week.
At the half-year stage, there was limited movement in terms of market share distribution among the unit trust industry players.
CIC continued to hold the largest slice at 24.3 per cent, followed by British American at 16.9 per cent, Old Mutual at 14.3 per cent and ICEA at 10 per cent.
The CMA in March started publishing the market share data for collective investment schemes, revealing that the top four firms hold two thirds of the total market share.
Among the other funds in the top 10, Commercial Bank of Africa’s unit trust made the largest gain from 5.5 per cent at the end of March to 7.6 per cent in June.