This archive report was first published on 2 July 2019.
Uganda's unit trust funds have experienced a remarkable growth in 2018, largely attributed to a significant increase in government borrowing and a substantial rise in contributors.
According to figures published by UAP-Old Mutual Financial Services Uganda Ltd, the total assets held by its money market fund grew from Ush3,483,912,952 ($934,319) in 2017 to Ush5,077,299,454 ($1.36 million) by the end of December 2018.
Similarly, the total assets held by the firm's unit trust funds jumped from Ush56,102,754,705 ($15 million) to Ush93,710,254,298 ($25 million) during the same period.
Simon Mwebaze, the general manager at UAP-Old Mutual Financial Services, attributed the growth to the firm's strategy of buying cheaper stocks and diversifying its portfolio to minimize losses.
“Due to the tough environment prevailing in the stock markets, we have opted to buy cheaper stocks whenever available to us in the market and are also trying to diversify the portfolio further in order to cut our losses,” Mwebaze said.
Uganda's government set a domestic borrowing target of Ush1.7 trillion ($455.9 million) for 2018/19, which led to a rise in interest rates earned on some Treasury bonds to more than 16 per cent.
As a result, investors sought to benefit from the government's need for cash, under pressure from revenue deficits.
Other players in Uganda's unit trust market include Stanlib Uganda Ltd and ICEA Investment Services Ltd, but comparative performance figures were not available by press time.
