UAP Old Mutual retail investors to earn 11% interest on their funds

The Fund maintained its investment bias towards government securities as assets crossed the Shs1 trillion mark

Kampala, Uganda | THE INDEPENDENT | Retail investors with a holding in UAP Old Mutual’s collective investment scheme will earn 11% interest on their funds as Assets Under Management cross the Shs1 trillion mark for the year 2022.

UAP Old Mutual Financial Services recorded a 79% growth in fund size closing the year at Shs 1.098 trillion in Assets Under Management owing to a sharp increase in the unit trust holders.

UAP Old Mutual Financial Services runs three investment funds: The Money Market Fund, UAP Umbrella Trust Fund and the UAP Balanced Fund. The umbrella trust fund recorded the highest growth of 80% whereas the balanced fund recorded a 10% growth. Money market fund, on the other hand, recorded a 33% drop during the same period under review.

The Fund’s Chairperson, Prof. Samuel Sejjaaka, said during a virtual Annual General Meeting on Aug.03 that the entity closed the year with 21,167 Unit holders representing a 77.96% growth from a base of 11,894 as of the 2021 period.

Investment portfolio

He said the fund maintained its investment bias towards government securities which continued to offer an improved yield compared to other assets.

He said the fund’s focus was on the medium to longer end of the yield curve as rates set off on an upward trend from the start of the year which was considered unsustainable hence the final quarter descent and eventual leveling off.

“Consequently, allocation to short-term assets such as call deposits was reduced during the year as that category was utilized for the duration and liquidity risk management,” he said.

In line with the fund’s equity market outlook, Prof. Sejjaaka said their participation in the Nairobi Securities Exchange (NSE) shares remained muted. The Kenyan equities market has been on a downward trajectory, with Nairobi All Share Index (NASI) Nairobi Securities Exchange 20 Index (NSE 20) and Nairobi Securities Exchange 25 Index (NSE 25) declining by 23.4%, 11.9% and 16.3%, respectively.

He said the strategies implemented led to fund returns of 11.63%, 11.07% and 11.63% against benchmark returns of 7.99%, 8.21%, and 0.85% for the Umbrella Trust Fund, Money Market Fund, and the Balanced Fund respectively.

“We are confident that the strategy in place will continue to deliver above-market returns over the long term,” he said.

He said the local stocks are expected to remain depressed in the short term on account of higher yields from other assets such as government bonds notwithstanding the Umeme counter that is expected to rise in the short term because of the concession termination and attractive dividend yield.

The concession for Umeme, the country’s electricity distributor, is expected to come to an in 2025 and has since started to record a surge in the share price on the Uganda Securities Exchange crossing the Sh400 mark, representing more than 45% increase compared to last year.

The company executives said the fund will also be looking to exploit buying opportunities caused by the global risk on or off sentiments especially on the Nairobi Stock Exchange where blue-chip companies have had significant drops as well explore the opportunity in the Airtel IPO listing.