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Enacy Mapakame Business Reporter
Financial Securities Exchange Limited (Finsec) will now start admitting unit trusts as it broadens channels by which investors can use as a hedge against obtaining inflationary pressures.
The unit trusts will be open for both institutional and retail investors, although the main target is the latter as the country is getting more enlightened on safe investment and savings methods.
Finsec general manager Garikayi Munema, said given the obtaining economic volatility characterised by inflationary pressures, unit trusts are a safe investment haven for small-scale investors as funds will be managed by experienced fund managers.
“What this means is we are extending the capital markets to retail investors,” said Munema in an interview.
“We are extending the channels of investments, what it means is, we are making it more convenient for investors, we are riding on technology to make it easier for people to participate in the capital markets,” he said.
Unit Trusts are collective investment schemes classified under mutual funds.
A mutual fund is a registered open-end investment company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments.
The combined securities and assets the mutual fund owns are known as its portfolio, which is managed by a registered investment adviser.
Each mutual fund share represents an investor’s proportionate ownership of the mutual fund’s portfolio and the income the portfolio generates.
Munema indicated Finsec had already taken steps towards launch of the project that should enable investors trade on the C-Trade through the unit trusts.
In line with this, fund managers have already been identified while Finsec has already put the platform to test to ensure smooth flow of business at launch of the project.
The Finsec boss said while inflationary pressures were a threat to investment, unit trusts were a good option and saving method especially for small-scale investors as its risk profile was low.
“It’s actually less risky, because what you are doing as an investor is put your money into a fund with experienced fund managers who manage it on your behalf.
“The fund manager knows the risks and which stocks to buy on your behalf. When you do this on your own as an individual, you run the risk of maybe buying a stock which may not be performing well.
“The benefits to investors are that this allows them to participate on the stock market even if they don’t have significant amount of money to buy stocks on the securities market,” he said adding that this would also enhance financial inclusion.
In Zimbabwe, capital markets are still regarded as elitist with an inclusion ratio of just 1 percent.
Capital markets regulator, Securities and Exchange Commission of Zimbabwe (SECZ) chief executive officer Tafadzwa Chinamo, recently said the high exclusion rate is in line with the nature of the investments which is very volatile.
Sun Jun 2019