Unit trusts have been a big feature of the personal finance space in Zimbabwe for a very long time. Like many financial products, they have had access problems due to complex processes that have been used in the past. C-trade activating unit trusts on their platform is a good move at the right time. What C-Trade offers are easier access to unit trust investment options. At present only Old Mutual Unit Trusts are available on the platform with talks to add others in progress according to C-Trade. Let’s have a look at the Old Mutual Unit Trusts available on C-Trade.
Unit Trusts funds pool money from various individuals and entities to purchase various assets such as shares, money market instruments and unitized property on behalf of the clients. Depending on your particular needs, Old Mutual Unit Trusts offer a variety of funds. Unit Trusts are managed funds so in addition to taxation on the income you will also pay fund management fees.
Money Market Fund
This fund purchases money market instruments. In the current inflationary environment, the fund is not performing well because of negative (below inflation) interest rates. Interest on your invested amount accrues daily and is paid monthly. The minimum deposit and transfer to the fund are ZWL$500 with a minimum 30-day vesting period before you can cash out. Management fees of 2.5% per annum apply.
The Old Mutual Balanced Fund combines equity investments and money market investments. If you’ve been following the events on the ZSE you’d be right to assume the Balanced Fund is doing better than the Money Market Fund. However, it is not been beating inflation so perhaps another one to look at another day. Gains are paid out quarterly. The minimum investment is ZWL$500. The fees are 1.5% of every deposit and 1.5% of the sum invested per annum, which works out to a little over 3% per annum. There’s also withholding Tax of 1%.
Property is a sort of a haven asset in inflationary times and the Old Mutual Property Fund conforms to this. The Old Mutual Property has investments in an impressive portfolio of properties that include Eastgate, Old Mutual gardens, Westgate, Tendeseka Park, Old Mutual centre Harare, CABS centre, Highglen, Chitungwiza mall and Batanai gardens among many others. Units in this fund trade quarterly on the 1st of January, April, July and October. You will need to invest ZWL$200 in the first instance and a minimum of ZWL$100 per month thereafter. Fees include 1% per deposit, 1% per annum management fee and a 0.5% per annum trustee fee. The units have a 6 month vesting period.
This is a medium- to high-risk fund investing in a spread of shares that are listed on the Zimbabwe Stock Exchange (ZSE). The fund aims to provide capital growth over the medium to long term. The fund is suitable for investors who seek steady capital growth and income. Data for the Equity Fund is not available on their platforms at present but the fund is available on C-trade.
These are pooled funds that invest in income-yielding medium to long-term government, quasi-government and corporate debt instruments. The lack of an active bond market hinders the full potential of the Bond Fund. Interest income accrues (is calculated) daily and paid half-yearly. They have a benchmark rate of CPI inflation + 2%. The minimum deposit and monthly transfer are ZWL$500 with a 6 month vesting period before you can cash out. Tax on interest will vary between 5 and 15% with other Income Tax Act exemptions applying.
The Unit Trusts have offered lacklustre returns but this is the state of the economy and more business unusual than business as usual. Hopefully, C-Trade adds more soon and we can get a better picture of the landscape.