Unit Trusts in Kenya: Everything You Need to Know in 2020

Should investing in Unit trusts in Kenya be one of your new year resolutions?

As we come to the end of the year, most of us had set financial goals at the beginning of the year to accomplish. Maybe, investing in Unit trusts was one of them.

However, the months have run past, and you have nothing to show. It is not too late, though, you can still hit your financial goals.

If you were looking to invest in Unit trusts, then this is your source of information. Join me as we learn more about Unit Trusts in Kenya and how to invest in them.

You may also be interested to learn about the Trade Finance Process, as explained in a later article.

Unit Trusts in Kenya: What is a Unit Trust?

A unit trust is an investment scheme that brings together money from different investors who share similar financial goals to be managed by a professional fund manager.

It’s worth noting that a trust is not an investment by itself, but generally, a means to invest in various financial securities.

What are the various types of Unit trust?

There are several financial securities that funds in a unit trust can be invested in. These include:

  1. Bonds funds – the funds in this unit trust is invested in treasury bonds and also referred to as fixed-income fund.
  2. Equity funds – This type of unit trust will provide assets to the stock market.
  3. Money Market funds – treasury bills and bank savings are the primary investments made in this type of unit trust.

What are the advantages of Unit Trust?

There are many benefits that an individual would enjoy from investing in a unit trust. We are, therefore going to discuss them in detail.

  • One can access an array of assets that may not be available to individual investors, usually. An example of this is some corporate bonds that are only available to group investors.
  • In addition to this, one can diversify their investments in that the unit invested can equally be subdivided to invest in different financial instruments and therefore spreading the risk.
  • Access to professional fund managers who make decisions informed by extensive research and who can gamble profitably.
  • Moreover, one can easily access the funds invested as there is an ease in buying and selling off the financial instruments invested in.
  • Easy access to information regarding the performance of a particular unit trust as the capital markets authority requires a firm to issue monthly statements regarding the performance of a unit trust.

Since now you understand what a unit trust is, the types available as well as the benefits one accrues for joining one. It is imperative to ascertain various things before going ahead and investing in the unit trust.

Related: List of Venture Capital Firms in Kenya

These factors include:

  1. The type of financial goal that one has is short term, long term or even midterm. This will inform your fund manager on which unit to spread your money across to reap maximum returns.
  2. Liquidity – it is essential to ask yourself if you need your money to grow or if you need regular income.
  3. Risk appetite – If one is risk-averse, they might want their funds to be invested in low-risk funds while if one has a high-risk appetite, they might have their funds invested in volatile securities like shares.
  4. Assess the financial strength and expertise of the staff employed by a particular Fund scheme
  5. Moreover, it is crucial to research the fund strategy, objective and portfolio. This ensures that your belief and value system is aligned with that of the firm that you are adopting.
  6. Check the performance of the fund and how it has been performing over some time as this will let you know whether it is headed in the right direction or not.

Assuming that you have learned all you need to know about unit trust and that you are now convinced that you need to invest in a unit trust. The next question to answer would be;

Best Performing Unit Trusts in Kenya

Several financial institutions are offering this service in the market today. Below is a list about some of the best unit trusts in Kenya:

You may also be interested read about Mutual Funds in Kenya to know which are the Best Performing markets.

The ICEA Lion Unit Fund

This year, the ICEA Lion Group Unit fund is ranked no five among the best performing Unit funds in Kenya. To invest in this fund, one needs to have a minimum of Ksh10,000.

According to ICEA, funds invested in this unit fund perform better than these in a savings account and are easier to access than those in a fixed account.

In addition to this flexibility, an investor also experiences ease, especially when it comes to topping up their investments.

One can do the toppings through Mpesa, direct cheque deposits as well as check-offs.

2. CIC Insurance Unit Fund

Currently in Kenya, CIC Insurance is managing nearly a third of the Unit trust Market in Kenya. It is ranking as the number 1 best-performing unit fund with 20.9 billion funds under management according to Business Daily.

For one to invest in this fund, they need to make an initial investment of only Kshs. 5,000 only.

Also Read about The CIC Money Market Fund: Who should Invest?

One can, therefore, invest in one of the four funds offered. These funds include Equity fund, money market, balanced fund as well as the fixed income fund.

CIC Insurance allows transfers from one type of fund to another at a stipulated fee within the firm. For instance, one could move their funds from the money market fund to the equity fund and vice versa.

Britam Unit Fund

Britam unit fund is second after CIC Insurance with assets over Kshs. 1 billion under its management.

See also Britam Money Market Fund: How to Join.

Britam has the lowest amount that a potential investor has to have to invest in the fund, and that is Ksh.1,000.

Related: Money marketing funds in Kenya 

There is also ease in joining this unit fund. For instance, say one wants to invest in Britam’s money market fund.

One has to dial *778#and top up their account with the Mpesa pay bill.

However, it is essential to note that Britam charges a management fee of 2.5% in its unit trust, whether invested under a balanced fund or money market fund.

Old Mutual Kenya Unit trust

Old Mutual unit trust ranks among the best in the county currently. One can choose to invest in one of the four products it offers. These products include:

  • Balanced fund – an initial investment of Kshs. 50,000
  • Bond fund – a minimal initial lumpsum investment of Kshs. 50,000
  • Money market fund – Initial investment of Kshs. 1,000 and annual earnings at 7%.

Related: UAP/OLD Mutual Money Market Fund: How to Join.

Cytonn Investment Unit trust

It’s a newbie in the market has made its entrance in 2018. Cytonn investment came to be after acquiring Serian Asset Managers who felt with money market funds, equity, and bond.

Unit Trust in Kenya Conclusion

We hope that with all the information above, you are now able to make an informed financial decision while investing in Unit trusts in Kenya.

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Mary is one of the leading writers on Urban Kenyans. She is knowledgable on matters Kenya and has been able to educate many Kenyans on this platform.

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