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2020: Boon year for trust investors

Business Reporter

Investors in unit trust funds enjoyed returns as much as 10-fold during the year 2020, according to the GroWealth Survey report released last week.

According to the survey, the best performing unit trust fund during the year was the Zimnat Prosperity Fund, which grew 1 240 percent for the period January to December 2020.

The growth was driven by investments in listed equities, which saw the Zimbabwe Stock Exchange grow 1 046 percent during the same period.

More significantly, the performance was way above inflation, which closed the year at 348,56 percent, which means investors not only protected the purchasing power of their money by investing in the unit trust funds but actually grew it even in hard currency terms.

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Unit trusts are pooled investment schemes that allow any investor, especially smaller retail investors, access to local financial markets by utilising the expertise of specialist fund managers.

The funds are  invested in various markets including the Zimbabwe Stock Exchange, bonds and money markets.

The GroWealth Survey tracks the prices and performance of various unit trust products offered by different investment management firms in Zimbabwe under the banner of Association of Investment Managers of Zimbabwe (AIMZ).

It is compiled by Intellego Investment Consultants (Pvt) Ltd with support from the Securities and Exchange Commission of Zimbabwe (SECZim) as part of its investor education drive.

The survey looks at all unit trust products offered by the different asset management firms and classify them according to their investment strategies and compares the performances of the different funds over different periods of time.

Commenting on the results, Mr Welcome Mavingire, managing consultant for Intellego Investment Consultants said it was clear that most investors who chose to invest in equity unit trusts realised good returns above inflation from different investment managers and funds.

He, however, emphasised that it was important for the investor to choose the fund manager who gives best returns and more importantly ensure that the unit trust fund they invest in matches their individual goals.

By dealing with licensed investment management firms, the investors were assured of regulatory protection unlike other unlicensed schemes that regularly proliferate in the market such as Ponzi schemes where a number of investors lost their hard-earned money.

Mr Mavingire pointed out that this showed that there were legitimate ways for investors to earn significant returns without resorting to gambling or such opaque investment schemes.

Given that the funds invest in different financial markets, it was important to understand the views and projections of the Fund Managers and analysts before investing.

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Asked on their projections for 2021, Mr Romeo Musimwa, the fund manager for Platinum Investment Managers said:

“The outlook for the local capital markets and investments in general going into 2021 is positive on the back of anticipated economic recovery.

“The agricultural season is looking very good and this should anchor economic growth although worries about the impact of Covid-19 remain. We have also seen currency stability and inflation slowing down, which is also positive for fixed income investments”.

HERALD