Slight Improvement In Unit Trust’s Growth But A Lot Needs To Be Done
KEY POINTS
Assets Under Management of the Unit Trust Funds have grown at a 4-year CAGR of 18.8% to Kshs 111.1 bn in Q1’2021, from Kshs 55.8 bn recorded in Q1’2017
As per the Capital Markets Authority (CMA) Quarterly Statistical Bulletin – Q2’2021, the industry’s overall Assets Under Management (AUM) grew by 6.1% to Kshs 111.1 bn as at the end of Q1’2021, from Kshs 104.7 bn as at the end of FY’2020.
Assets Under Management:
Assets Under Management of the Unit Trust Funds have grown at a 4-year CAGR of 18.8% to Kshs 111.1 bn in Q1’2021, from Kshs 55.8 bn recorded in Q1’2017, as shown in the graph below:
Approved Collective Investment Schemes:
According to the Capital Markets Authority, as of the end of Q1’2021, there were 25 approved Collective Investment Schemes in Kenya of which only 19 were active while 6 were inactive. The table below outlines the performance of the Fund Managers:
Key to note from the above table:
Assets Under Management: CIC Asset Managers remained the largest overall Unit Trust Fund Manager with an AUM of Kshs 44.8 bn in Q1’2021, from an AUM of Kshs 43.0 bn as at FY’2020, translating to a 1% AUM growth,
Market Share: CIC Asset Managers remained the largest overall Unit Trust with a market share of 3%, a decline from 41.1% in FY’2020. Key to note, Britam recorded the highest increase in its market share with the market share increasing to 12.7%, from 11.8% in FY’2020, and,
Growth: In terms of AUM growth, Co-op Trust Investment Services Limited recorded the strongest growth of 36.2%, with its AUM increasing to Kshs 1.4 bn, from Kshs 1.0 bn in FY’2020. Cytonn Asset Managers recorded a growth of 2%, with its AUM increasing to Kshs 960.2 mn, from Kshs 819.5 mn in FY’2020. Amana Capital recorded the largest decline, with its AUM declining by 44.2% to Kshs 75.6 mn in Q1’2021, from Kshs 135.4 mn in FY’2020.
Metropolitan Cannon Asset Managers, FCB Capital Limited, Fusion Investment Management Ltd, Standard Investment Trust, NatBank Trustee & Investment Services, and ABSA Asset Management Ltd remained inactive as of the end of Q1’2021.
Comparison with other markets and asset classes:
Unit Trust Funds assets recorded a q/q growth of 6.1% in Q1’2021, while the listed bank deposits recorded a weighted growth of 21.8% over the same period.
According to World Bank data, in well-functioning economies, businesses rely on bank funding for a mere 40.0% with the larger percentage of 60.0% coming from the Capital markets. Closer home, CMA notes that in 2020, businesses in Kenya relied on banks for 95.0% of their funding while less than 5.0% came from the capital markets. Additionally, our Mutual Funds/UTFs to GDP ratio at 5.4% is still very low compared to the global average of 61.8%, indicating that we still have room to improve and enhance our capital markets.
The table below shows some countries’ mutual funds as a percentage of GDP:
Over the past 4 years, the UTFs AUM has grown at a CAGR of 18.8% to Kshs 111.1 bn in Q1’2021, from Kshs
55.8 bn recorded in Q1’2017. However, even at Kshs 111.1 bn, the industry is dwarfed by asset gatherers such as bank deposits at Kshs 4.0 tn and pension industry at Kshs 1.4 tn as of the end of 2020. Below is a graph showing the sizes of different saving channels and capital market products in Kenya as of December 2020:
