The product could be a solution for pension funds seeking to diversify their holdings
Kampala, Uganda | ISAAC KHISA | Sanlam Investment East Africa has unveiled Sanlam Income Fund in a bid to raise more capital for various investments but also provide favourable returns to investors.
This new product places Sanlam Investment East Africa in the ranks of UAP Financial Services Ltd and ICEA Investments Ltd that have acted as both unit trust funds and fund managers for some time now.
The Sanlam Income Fund will be accessible to prospective investors in Uganda for as low as Shs 100,000 and offering returns above the prevailing inflation rate. However, there will be no limit to the amount one can invest after the initial deposit. Currently, the return on savings in unit trust funds oscillates between 10% and 12% per annum.
The investor’s savings will be channelled in multi assets such as cash, government and corporate bonds, inflation-linked bonds, listed property and equities, both in Uganda and abroad.
Mark Mulatya, the chief operating officer at Sanlam Investments East Africa said the company believes in improving people’s lives by empowering them to be financially stable through wealth creation.
“There’s no better time to respond to the current needs of Ugandan investors than now when many traditional investment opportunities are threatened by the COVID-19 pandemic and its adverse effects,” he said.
He said the company has witnessed a sharp rise in demand and uptake of the Sanlam Income Fund to the tune of over Shs 8 billion in the past few weeks.
“We therefore look forward to emulating the strong growth we have seen in similar products that we offer elsewhere in the East African region, where in total Sanlam Investments East Africa is responsible for the investment of over US$3.3 billion in clients’ assets,” he said.
“It is against this background that we decided to launch the Sanlam Income Fund and Unit Trusts, to further catalyse the growth of the industry by creating a new and low-entry investment opportunity for investors in Uganda.”
Capital Markets Authority CEO, Timothy Kalyegira, said the new product will further promote the growth of the country’s capital markets and speed up the uptake of Collective Investment Schemes as the fund will deliver strong returns.”
“The Sanlam Income Fund assists pensioners who are retiring as it becomes an ideal investment for them to preserve their capital while investing a lumpsum amount or regular contributions and still have access to their funds whenever they need it,” added Martin Nsubuga, Chief Executive Officer, Uganda Retirement Benefits Regulatory Authority.
Nsubuga said the Sanlam Income Fund is also a solution for pension funds seeking to diversify their holdings in a cost-effective and timely manner because it’s a well-regulated fund that promotes sustainable wealth creation and growth, for individuals and institutions countrywide.
This development comes as statistics from the industry regulator, Capital Markets Authority, indicates that the country’s unit trust funds recorded more than double their assets under management (AUM) to Shs 388.5bn for the FY2019/20 as a result of an increase in the number of local investors embracing the product.
UAP Old Mutual Financial Services held the largest assets with Shs 271.1bn during the year, followed up closely with ICEA with 62.2bn. Britam and Xeno held Shs 40bn and Shs14.8 bn, respectively.
However, the unit trust fund’s contribution to the Gross Domestic Product stood remains at less than 1%. This is far lower than that in Kenya and Morocco, whose asset contribution to the economy stood at 0.7% and 44.8%, respectively.
In relation to fund managers, Sanlam Investment East Africa held the lion’s share of assets under its management at Shs 1.55trillion, GenAfrica Shs1.01trillion and Britam at Shs 410bn.
UAP Financial Services Ltd and ICEA Investments Ltd held Shs 362.7bn and Shs 162bn of the assets, respectively.