Enhancing Investor Confidence in the Unit Trust Managers in Uganda

Feb 12, 2024

Following up on last week's articles about the compounding power of investing with Unit Trust Managers, I have received hundreds of direct messages on X and WhatsApp from potential investors curious about which company they should invest with. Since I am not currently “affiliated” yet with any of these companies, I have refrained from endorsing any particular one. However, I have opted to compose this article about all the managers to ensure investors can make informed decisions.

All these managers are fully registered, regulated, and supervised by the Capital Markets Authority of Uganda, which should instill confidence in investors when investing with any of these companies. The regulatory oversight ensures that these managers adhere to the highest standards of financial management and ethical conduct, thereby safeguarding the interests of the investors.

Unit Trust Managers are responsible for the strategic allocation of funds across various investment avenues. They analyze market trends, assess risk factors, and make informed decisions to optimize the returns on the invested funds. The uniqueness of each manager lies in their investment strategy and the sectors they focus on.

The management fee charged by these managers is a critical aspect to consider when investing in unit trusts. This fee is a percentage of the total assets under management and is used to cover the operational expenses of the trust. UAP Old Mutual and ICEA Asset Managers charge a management fee of 2%, while Sanlam Managers and XENO Uganda charge a slightly lower fee of 1.50%.

Custodians and Trustees play a crucial role in the Unit Trust structure.

Custodians, typically banks, hold the assets of the trust in safekeeping. They ensure that the assets are securely held and are responsible for the administration of these assets.

Trustees, on the other hand, act as a safeguard for the investors' interests. They oversee the activities of the Unit Trust Managers to ensure compliance with the trust deed and relevant regulations.

The presence of reputable banks such as Standard Chartered Bank, KCB Bank Uganda, and Stanbic Bank Uganda as custodians and trustees adds an additional layer of security and trust for the investors.

These banks have a strong track record of reliability and adherence to regulatory standards, which should give investors more confidence to invest in the Unit Trusts.

External auditors

External auditors also play a significant role in ensuring the safety of the investors' funds. They provide an independent assessment of the financial statements of the trust, ensuring that the funds of investors are safely invested and managed. KPMG, PWC, and EY are some of the highly reputable auditing firms that serve these Unit Trust Managers. The involvement of these globally recognized auditing firms further enhances the credibility of the financial reports of these trusts, thereby boosting investor confidence.

Assets Under Management by Each Fund Manager.

As of September 2023, these Unit Trust Managers held different amounts of assets under management (AUM). UAP Old Mutual had the highest AUM at UGX 1.46 Trillion, followed by ICEA Asset Managers at UGX 302.3 Billion. BRITAM Asset Managers and XENO Uganda had AUM of UGX 194 Billion and UGX 57.5 Billion respectively. Sanlam Managers and SBG Securities Limited had AUM of UGX 116 Billion and UGX 4 Billion respectively. The variation in AUM reflects the different investment strategies and risk profiles of these managers. It also provides an indication of the trust and confidence that investors have in these managers.

As an Investor the Unit Trust Managers in Uganda, backed by robust custodian and trustee structures and audited by reputable firms, offer a secure and regulated platform for investors. The oversight by the Capital Markets Authority of Uganda further enhances investor confidence, making these trusts an attractive investment avenue.

Happy Investing Everyone.

Alex Kakande