We looked at the performance of Unit Trusts in comparison to other alternatives at the turn of each quarter in 2021 thanks to the GroWealth December 2021 Unit Trust Report which is brought to us by the Investor Protection Fund and the Securities and Exchange Commission of Zimbabwe in partnership with Intelligo. It has shone a bright light on the opportunity available in Unit trusts as a credible and viable investment alternative that is easily accessible to many. So the question remains, how well did Unit Trust Funds perform in 2021? Thanks to the latest report we have been able to compile the data and the results might surprise a few.

Equity-Based Funds

We closed the year with 23 equity-based funds and hybrid funds. The performance this time around has been somewhat of a pleasant turnaround. Through 2020 and 2021 fund managers failed to beat inflation, let alone the alternative investment options on the ZSE. A quick look at our graph below shows fund managers adjusted their positions and improved their performance drastically. Let’s interpret this.

Only the Zimnat property fund (14.33%) failed to beat Zimstat inflation (60.74%) of the 23 funds. Whilst not everybody agrees that Zimstat is an accurate inflation measure it certainly is noteworthy to beat inflation. If we look at the parallel market exchange rate appreciation only the property funds Zimnat and Old mutual (78.94%) failed to beat the approximate 120%  appreciation.  Over to investment alternatives, only 8 funds failed to beat the ZSE All Share Index’s 311.60% return which marks a big turnaround. To compare to something that we could have bought in 2021, the Old Mutual ZSE Top 10 ETF marked its maiden year with impressive returns of 339.12% which was beaten by an impressive 11 out of 23 funds. Nearly half of fund managers performed better than the top 10 index ETF. Fidelity seems to have pulled up in the final quarter of the year while Platinum maintained its stellar performance.

Money Market Funds

Every rose has its thorns they say and in the unit trusts these are the money market-based funds. Before we talk about performance we must acknowledge that the issues in the monetary space run deeper than Unit Trust Funds and their managers. With negative real interest rates in the market thanks to high inflation there isn’t much to look forward to in this market.

Only 3 of 11 Money Market based funds managed to beat Zimstat inflation. None of the money market-based funds managed to beat the parallel market rate appreciation for 2021. The funds are victims of circumstance as the economy still has some problems to deal with. The only caveat to this is the Zimnat USD Bond Umbrella fund which is denominated in US Dollars and therefore returned 6.94% over the exchange rate. It’s slim pickings here otherwise and the changes need to be made higher up the totem pole before we see anything meaningful here.

Just a reminder that we look at Unit Trusts from an academic perspective. To achieve this we look at them as though all funds are the same but they are not. It’s important to know that the funds have different requirements, purposes, durations and minimum buy-ins.