The ZSE has seen the worst in the 2nd quarter of 2022 and the losses extended into the 3rd quarter of the year. Unit trusts for the most part have followed the capital markets into the red. Feeling the heat of regulatory effects on the equity markets unit trust funds that hold equities have dropped from positive year-to-date returns to negative. Money market funds have faired better, keeping positive year-to-date returns though failing to beat any inflation measures. We look at the returns on unit trust funds as reported in Intelligo’s Growealth report for July.

Equity and Property Funds

Zimbabwe Unit Trust July 2022

Our equity and property-based unit trust provide grim reading across the board save for the property-based trusts which now lead the pack after long being the laggards. The cause? Equities have taken a hit thanks to a slew of measures unleashed by authorities in the 2nd and 3rd quarters to arrest the country’s exchange rate depreciation and inflation. The measures have arrested neither significantly at the moment but have claimed scalps on the capital markets. Property values are not easily susceptible to changes in the monetary environment and some may argue that property’s haven asset status was enhanced by measures introduced by the government. Only the Old Mutual Property Fund and the Zimnat property fund have positive YTD returns. The Zimnat fund dropped from 53,75% in April while the Old Mutual Property fund grew from 20,02% in the same period. No fund managed to beat CPI inflation, official exchange rate depreciation or parallel market exchange rate depreciation in the year so far.

Interest-based Unit Trusts

While the policy has hit capital markets nothing is all bad to all things. Interest-based Unit trusts funds have maintained positive yields for the year thus far. Old Mutual money markets funds have improved handsomely since our last check at the end of April. The financial giant flexed its muscles. Gains can be attributed to the improved interest rate environment. Most other funds have mixed performance compared to April showing small gains or losses evenly divided. However, all funds pale in comparison to CPI inflation, official exchange rate depreciation and parallel market exchange rate depreciation. The US dollar-denominated money market funds are starting to look very attractive all things considered.

The investment climate in Zimbabwe has been affected by the route chosen by authorities to arrest currency depreciation in Zimbabwe. Recently introduced measures like the Gold coins offer a great alternative store of value but take away the liquidity which buoyed equity markets. As the markets continue to digest the impact of measures we should see more of the same we have seen in recent times.