Old Mutual Kenya Unit Trusts. How Does it Work and What are The Benefits

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Old mutual Kenya is known for offering one of the best interest rates for unit trusts. Old Mutual Kenya’s unit trust products have been designed to cater for a variety of investment needs and risk appetites. If you’re looking to save for the longer-term and are prepared for a medium- to high-risk investment then the company’s Equity Fund is the ideal choice for you. On the other end of the spectrum the company has the Money Market Fund which is optimised for investors who prefer more conservative exposure to risk.

The Unit Trusts offered by Old Mutual are categorized into five groups, namely:

  • Equity Fund
  • Bond Fund
  • Balanced Fund
  • Money Market Fund
  • East Africa Fund

We shall discuss each category and exhaustively and at the end of the day, you will choose where to invest your money. Please note that unit trusts are less riskier compared to shares and attract higher interest rates than fixed deposit account savings.

  1. Old Mutual Equity Fund

Old Mutual Equity Fund invests principally in a well-diversified portfolio of equities which makes this fund best suited for a high-risk profile.

Fund Objectives

To generate long–term capital growth through active management, investing principally in a well-diversified portfolio of equities, i.e. stocks and shares across several sectors of the Kenyan economy, in earnings of corporations and assets with a medium-high risk profile.

Investment Portfolio

The securities to be invested in the Old Mutual Equity Fund and the their book value limits as authorised by the Act are:

Securities listed on the securities exchange in Kenya – up to 80%.

Offshore deposits – These includes stocks held in Dollar, Euro or Pound denominated securities – up to 10%.

Near cash deposits – up to 10%.

Risk Profile

This fund is intended for the high risk investor. The fund invests in shares listed on the Nairobi Stock exchange and is thus subject to the volatility of the market and company performance. Clients are advised to invest for at least five years if they are seeking to attain capital growth through investing in this fund. This fund is attractive to young and middle aged individuals seeking to achieve aggressive growth on their portfolio. It is also good for investors who are not seeking to have constant and easy access to their funds.

Distribution

The Old Mutual Equity Fund distributes twice a year. In between the distribution dates, Old Mutual receives interest and dividends on its investments.

For more information on this fund, please view the Fund Fact Sheet. Please note that the minimum lump sum investment for this fund is KShs 50 000.

  1. Old Mutual Bond Fund

Old Mutual Bond Fund offers a dynamically blended portfolio of fixed-income securities issued by the Kenyan government and corporations with some offshore element. The fund aims to achieve the best total returns possible from a well-diversified portfolio invested in a whole range of bonds.

Old Mutual Bond Fund benefits include;

Expert Fund Management – This basket of bonds is assembled by our financial experts to ensure that the final product has minimum risk and maximum returns. Our Fund Managers have the required skills to build a competitive bond fund which may be unavailable to most individual investors.

Diversification – The Bond Fund allows you to spread your risk by investing in many individual bonds which ensures the performance of one individual bond does not significantly negatively impact the performance of the Bond Fund. A Bond Fund is ideal if you have small amounts to invest, since you can spread your money across a wide range of bond investments.

Higher savings – The interest rates on bonds are usually greater than the rates paid by banks on savings accounts. This means that if you are saving and you don’t need your money in the short term, the Old Mutual Bond Fund will give you a greater return without posing too much risk.

Continuous growth – In the Bond Fund, income from all the bonds can be reinvested automatically and added to the value of the fund. Furthermore, bond funds tend to pay periodic interest which includes the interest payments on the fund’s underlying securities.

Flexibility – Though the recommended investment period for the Bond Fund is more than 2 years you can withdraw at any time at the prevailing unit price. With the Bond Fund you will not have to worry about getting a buyer for your bond or awaiting maturity dates as would be the case if you invested into individual bonds.

Flexi payments – Old Mutual allows you to top up your account at any point in time through our “easy pay” options; M-pesa, postapay, check-off, cheque or direct debit according to your preference.

Regular account statements – You can keep track of your bond fund investment since the funds value is assessed daily. To know the value of you investment at any point in time you can check your account value by logging into our website or through sms. Or through the free monthly statements that are forwarded to your email account. In addition you can check the daily unit price in the local dailies or through our website.

Free financial advice – Our Old Mutual Financial Advisors are available to offer you free financial advise. They will assist you to develop your individual financial goals and help you plan for your future.

The Old Mutual Bond Fund is a safe and conservative investment. It provides a reliable stream of income and serves as a great investment vehicle for saving when you don’t want to put your money at risk.

Please note that the minimum lump sum investment for this fund is KShs 50,000.

  1. Old Mutual Balanced Fund

Old Mutual Balanced Fund invests in a diversified portfolio which makes this fund best suited for a medium risk profile. The fund will always invest at least 25% of the fund’s total assets in interest bearing assets and based on the manager’s assessment of economic and market factors this could well show a higher return.

Fund Objectives

To maximise total return through investment in a diversified portfolio of interest-bearing assets, domestic equities and offshore investments. Due to the diversified nature of the portfolio, the fund offers medium risk profile.

Investment Portfolio

The listed shares to be invested in the Old Mutual Balanced Fund as authorized by the Act are:

Listed shares listed on the NSE – up to 50%.

Offshore deposits – These includes stocks held in Dollar, Euro or Pound denominated securities – up to 10%.

Near cash deposits – up to 40%.

Risk Profile

This fund is intended for the moderate risk investor. This fund invests within the Nairobi Stock exchange and is thus subject to volatility of the market and company performance. Clients are advised to invest for three to five years if they are seeking to attain capital growth. This fund is attractive to investors seeking to achieve moderate growth on their portfolio while earning income. It is also good for investors who are seeking to have part of their portfolio as offshore investments.

Distributions

The Old Mutual Balanced Fund distributes quarterly.

For more information on this fund please view the Fund Fact Sheet. Please note that the minimum lump sum investment for this fund is KShs 50,000.

  1. Old Mutual Money Market Fund

Old Mutual Money Market Fund invests only in money market instruments spread between institutions of repute. The fund aims to provide steady growth of income, reasonable level of current income and provide stability for capital invested.

Fund Objectives

The objective of the Old Mutual Money Market Fund is to generate total return through investing in a range of debt securities, fixed deposit instruments and near cash in the Kenyan market, while providing conservative risk exposure for investors.

Investment Portfolio

The securities to be invested in the Old Mutual Money Market Fund and their book value limits as authorised by the Act are:

Securities issued by the government of Kenya – up to 80%

Securities listed on a stock exchange in Kenya – up to 80%

Off-shore deposits – up to 10% (this includes debt securities held in Dollar, Euro or Pound currencies)

Near cash deposits – up to 10%

Risk Profile

This fund is suitable for the conservative low risk investor who would like a safe parking place for their funds. It is ideal during times of stock market turbulence and uncertainty and perfect for investors who would like to benefit from the yield / interest earned. The client is advised to invest their money for at least a year.

Fund Prices

The price of the Old Mutual Money Market Fund is KShs 1 and remains static.

The yield changes on a daily basis and is the interest portion earned daily by the assets purchased by the fund for the investor.

Interest is calculated on a daily basis, and credited to the investor’s account monthly.

Distribution

The Old Mutual Money Market Fund will distribute income on a monthly basis. Income distributed in the Money Market Fund consists of interest accrued from the purchased assets of the fund.

For more information on this fund, please view the Fund Fact Sheet. Please note that the minimum lump sum investment for this fund has been reduced to KShs 1,000.

  1. Old Mutual East Africa Fund

Old Mutual East Africa Fund invests in a diversified portfolio of East African equity, bond and money market instruments offering a balanced portfolio.

It’s ideal for investors looking beyond the Kenyan investment environment with a medium to high risk profile. Returns consist of interest and a dividend portion and are credited half yearly, in June and December.

For more information on this fund please view the Fund Fact Sheet. Please note that the minimum lump sum investment for this fund has been reduced to KShs 50,000.

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