The January issue of GroWealth report was recently published. In this issue, Intellego’s Head of Corporate Advisory Services, Owen Namusi, highlighted the Funds’ exceptional performance as their returns beat inflation in the year 2020, with the best funds being those investing in Listed Equities which grew by more than 8 times in that year alone.
In his analysis of the Unit Trust Funds as a reliable investment vehicle, Namusi said that at the end of January 2021, Unit Trust Funds continued to perform very well as at the end of January 2021 the Funds beat inflation, a positive outcome for investors.
He said since the launch of the GroWealth publication in November last year, there had been a lot of enquiries from the investing public on Unit Trust performances.
“In fact, we have seen some renewed interest after people realising the Funds are earning very good return. Since the publication of the GroWealth Report in November, it has been revealed that there is appetite for easily accessible, quality information on the capital markets in general, and investment products in particular. It is incumbent upon us to continue to enhance this information flow if we are to revive and grow the Unit Trust investment vehicles. It is a bit surprising just how few people there are (relative to the population), who are aware of these products, “he said.
The January 2021 GroWealth Report shows that Unit Trust Funds performed above the Month-on-Month inflation rate of 5.43%, with most Unit Trust Returns ranging between 30% and 40%. This was mainly driven by the gains on the stock market which has opened the year on a high note. Investors in these unit trusts funds have therefore achieved a good real (i.e. positive above inflation) return during the month.
The fundamental goal of the GroWealth Unit Trust Survey which is summarised in the Monthly Report is to keep members abreast in the performance of different unit trust products. Investors can follow how each of the Unit Trust Funds is performing from time to time by examining these monthly reports. For those investors who are already invested in one, or more unit trusts, they would have been receiving regular performance reports from their respective fund managers. The GroWealth Report shows the performances of all the active funds across different time intervals and this gives investors the required perspective on the medium to long term investment performances of the various funds. This is the key element to decision-making for any investor. The frequency of publication of the GroWealth Report is intended to increase to more than once a month in the medium term, and that should enhance the information flow and provide for better performance tracking to the benefit of the investing public.
Before making any investment into vehicles such as Unit Trusts, an investor must be clear as to their investment objectives. These objectives are determined by answering the following questions:
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- How much do I want to invest?
- For how long do I want to invest?
- What is my target return over that investment period?
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“The investor must also be aware of their own risk profile as this determines which unit trust funds are or are not acceptable to them. The investor can then examine the track record of the various funds and use that as a guide to select the preferred ones based on their preferences as outlined above,” Namusi concluded.
Some definitions of Types of Funds that come under Unit Trusts
General Fund – A fund that aims to achieve capital growth by investing in shares of companies listed on the stock exchanges, particularly those shares of the largest companies as these are regularly traded and therefore considered most liquid (i.e. easily tradable).
Fixed Income Fund -A fund that aims to generate regular income by investing in financial instruments that earn a regular interest (i.e. fixed income) such as Treasury Bills and other Money Market Instruments, Government Bonds, Corporate Bonds and Debentures.
Balanced Fund – A fund that invests in a mixture of listed company shares and fixed income instruments in order to achieve both capital growth and regular income.
Other funds under Unit Trusts– There are specialist funds that are customised to the investment objectives of particular individuals or groups of individuals.
This article was written as part of the Securities and Exchange Commission of Zimbabwe ’s Investor Education Campaign in partnership with the Investor Protection Fund. For more information, please contact: seczim@seczim.co.zw
