The investment gospel has been spread all around and the results are starting to show with more participants in investment markets. Many are of course doing this for the first and as such will not pile huge amounts of money into the money even if they can afford to. With small amounts of money to work with things became complicated with the ZSE rule for digital platforms Ctrade and their ZSE direct that forced transactions to be done in multiples of 100 shares which lead many to look at low priced shares. The emergence of the Old Mutual ZSE Top ten ETF (ETF) and a concerted effort to promote unit trusts has increased the options for those investing with small amounts. So let’s compare Units Trusts, the ETF and low priced shares.

Low price point

I’ve seen a lot of financial market evangelists tell people they can invest in most cases from as little as ZWL$500. This is true. However, to be fair this is a deposit minimum for many portals. Some portals allow you to deposit as little as ZWL$100. You will see the same feature in Unit Trusts where the lowest minimum is ZWL$100. The reality is to give yourself a little more choice you need to play a little bit higher than the minimum.  A lot higher actually. To make things easy and keep them comparable let us suppose we have ZWL$1000 to invest. On the ZSE this means you would only be able to buy 100 shares of companies priced $10 or less (excluding costs) of which there are 19. This amount would allow you to acquire 200 units of the ETF and qualify you for investing 8 of the 23 equity and property-based Unit Trusts. So let’s look at these 3 options and understand their pros and cons.

Unit Trust Funds

Unit Trust Funds are pooled investment funds that are split into multiple small units. They are managed funds meaning that there is a team of people that work hard to work out the best possible investment targets to bring owners of the fund the best return. Looking at the last Growealth Report we have 23 equity and property (return based) and 11 money market (interest-based) unit trusts. They’ve done a good job of beating inflation as reported by Zim Stat but the performances have been a little questionable when compared to the ZSE that the equity-based ones are invested in. Unit Trusts have the advantage of being funds managed by professionals and requiring little work on the part of the investor. However, they are not the easiest of investments to get into. Despite the great work being done by Growealth and companies like Old Mutual who have added their Unit Trusts to online trading platform Ctrade they still present a bit of complexity. They also lack flexibility as many have lock-in or vesting periods, essentially minimum holding periods before you can cash out. Finally, the fund managers are rewarded for their work and fees are something to look out for when it comes to any managed fund.


Exchange-Traded Funds are pooled funds that invest in a benchmark and like unit trusts the fund is divided into small units. The difference comes in the Exchange-traded part. These funds trade on the exchange like shares of companies do. Our first and only (for now I’m sure) ETF is the Old Mutual ZSE Top Ten ETF. So this fund invests in the ZSE’s top 10 counters. So unlike a managed fund as we have with unit trusts it is an index fund, it tracks a particular share index, the ZSE top ten. This takes professional management out of the fund. The top ten index is decided by market capitalisation (price x number of shares) of the companies. This is updated every quarter for changes in the top ten. Tracking the top ten has seen both good and bad days in the short 9-month life span of the ETF. Little movement in the top 10 counters in the early part of the year left the ETF largely lifeless. However, the 3rd quarter surge in top counters that is extending into the 4th quarter has seen the ETF double its value in a short period. Unlike a managed fund or a static index the top ten is a performance-based index the only way into the top ten index is price growth and the only way out is price decline or being overtaken.

Penny Stocks

Penny stocks are small capitalisation (size) companies that often have very low share prices. The prices are usually quoted in US dollar pennies or fractions. For this discussion, we will take anything under ZWL$10 (US$0.10 at auction rate) per share to be a penny stock.  The penny stock or small-cap story is something of a mixed bag. First, we need to understand that the ZSE share market normally processes sales of shares in multiples of 100, making the minimum number of shares 100. As we worked out earlier this limited the options of many. Recently both ZSE Direct and Ctrade introduced the ability to buy in numbers smaller than 100, so 1 -99. This is of course subject to availability which is low in most cases. The Small-Cap index has of course seen really good days in 2021 by far outpacing any other index. 5 of the top 10 in the year to date returns are small-cap companies. This gave people great confidence in small-cap counters and made them a seemingly better choice than the top counters. There’s a dark side to this of course. While companies like Unifreight have gone up and kept the same energy popular small-cap counters like Willdale and Star Africa have flattered to deceive. And then there is Getbucks which taught many people some valuable lessons in 2021. Small-cap companies tend to be small-cap companies for a reason for every Unifreight there are many disappointments.

The Verdict

If you’re a little more experienced with investing you have probably made your mind up already. There’s a lot to think about with each of the 3 options. Of course, what matters most to you is the growth of your money. Who cares what number of shares you own. You want to put in 1000 and get 1200, 1500 or 2000. Other factors like ease of entry, ease of exit, the workload involved, costs and predictability of results also matter in the consideration. Across all the factors the Old Mutual ZSE Top Ten ETF provides the best option for those still learning the ropes. This is because of the design of this ETF and not a blanket position for all ETFs that will pop up in the future or that exist in other markets.