Unit Trusts

In this episode recorded 15.08.2024, our guest host, Rhina Namsia, is joined by Wilson Wariari - Chief Investments Officer at ArvoCap Asset Managers and Bill Oloo, CFA - Portfolio Manager at Kuza Asset Management on an insightful discussion on understanding unit trusts and their importance as investment tools.We also explore the risk and return of different unit trust products, the investment decision process, assessing a fund manager’s performance, management fees, and macroeconomic factors affecting unit trusts.Subscribe to get notified when we make a new post.Key Quotes“According to the Capital Markets Authority, a unit trust is simply a pool of assets, which have been gathered together based on the contributions of members. And according to the regulations, we have a variety of unit trusts. We have a money market fund. We have an equity fund. We have a fixed-income fund, and at the same time, we have a balanced fund. And if you have to look at the latest statistics around 86% of the funds are domiciled in money market funds and fixed-income funds. And according to the latest statistics we have, at the end of the first quarter of the year, we had around 225 billion shillings in unit trusts.”“A client wants the highest possible return while taking the most appropriate level of risk, not necessarily the smallest, but the most appropriate level of risk.”“One should try as much as possible to expose oneself to asset classes whose returns are not necessarily conjoined. By conjoined, they don't necessarily go up together or they don't exactly go down together. So in other words, you need to expose yourself to a basket of security so that at least from a risk perspective, one is effectively covered.”“One key aspect that would be able to determine whether or not one can be successful from a long-term perspective, just in terms of gathering wealth would be discipline, and the ability to just be goal oriented.Show Notes00:00:00 Introduction 00:05:21 Understanding Unit Trusts00:09:15 Risk and Return00:13:03 Momentum Fund00:16:52 Investment Decision Process00:20:45 Assessing Fund Managers’ Performance00:23:28 Diversification and Advantages of Unit Trusts00:30:09 Active Funds vs Passive funds00:40:41 Investment Decisions in Active Funds 00:48:33 Minimum Investment Amount00:53:55 Management Fees and Costs 01:00:00 Macroeconomic Factors Affecting Unit Trusts Get full access to The Mwango Weekly at mwangocapital.substack.com/subscribe