The Board of the Capital Markets Authority (CMA) has approved the grant of a license to Jubilee Financial Services Limited to operate as a fund manager having met all requirements. The grant of the license brings to 27 the number of fund managers licensed by CMA.
A fund manager is a manager of a collective investment scheme (such as a unit trust), registered venture capital company or an investment adviser who manages a portfolio of securities in excess of an amount prescribed by the Authority from time to time.
Experts said that although Jubilee’s entry signalled increased competition, there was still room for growth since many Kenyan investors were buying shares, bonds, land and other assets directly, losing out on professional guidance.
African Alliance Investment Bank chief executive Paul Mwai said market penetration for funds held under unit trusts was still low, offering newcomers an opportunity for growth.
Lack of product awareness and failure to understand how the firms work have resulted in low market penetration, said Mr Mwai.
The value of assets under management by unit trust firms increased by 68 per cent last year, boosted by share price gains at the stock market and increased purchase of Treasury bonds.
Fund managers in Kenya are working to safeguard pension funds from further erosion by a protracted bear run at the stock market.
Over the past year, the Nairobi Securities Exchange has recorded a persistent bear run that has seen the NSE All-Share Index and the NSE 20 Share Index plunge by 18 percent and 23.7 percent respectively.
This is in contrast to 2017 when the All Share Index recorded 27 percent growth and the NSE 20 Share Index rose by 16.5 percent.
The depressed performance wiped out $4.9 billion in investor wealth as the NSE saw market capitalization decline from $24.3 billion in January to $19.4 billion in December 2018.
The amounts held under unit trusts has been growing with data from CMA showing that by the end of last year the trusts were worth Sh28 billion, a 75 per cent increase from 2009’s Sh16 billion. The figures are, however, a drop in the ocean when compared to money held in stocks.
Jubilee’s entry in the market brings the number of licensed fund managers to 20.