Old Mutual Unit Trust Company launches

Old Mutual Malawi, whose parent company is Old Mutual plc, says they have opened a new window of opportunity for companies and individuals on the money market. Reserve Bank of Malawi deputy governor, Mary Nkosi who presided over the launch, described the initiative as 'the first open-ended collective investment scheme'.

"Evidence suggests that well-functioning financial market can bring real benefits to the poorest members of the society and reduce income inequality," said Nkosi.

Deepening financial markets in Malawi

She said what the central bank's role in such ventures is to develop and deepen financial market in Malawi.

"[Like in this case] we offered support to Old Mutual's positive initiative to start a unit trust by providing regulatory guidance," she said.

The central bank's second in command said developed financial markets allow transfer of resources from savers to investors when they function properly.

"[They] contribute to making the economy more robust to shocks by enabling risks to be apportioned appropriately," said Nkosi.

Old Mutual plc is registered on London Stock Exchange (LSE), Johannesburg Securities Exchange (JSE), Malawi Stock Exchange (MSE), Namibia Stock Exchange (NSX) and Zimbabwe Stock Exchange (ZSE). Old Mutual Unit Trust was incorporated in 2009, but was awarded an operating licence by the central bank in March 2011, but the company's products were opened to the public on 1 September 2011.

Old Mutual's group managing director, Chris Kapanga said the launching of the unit trust would permanently change the investment climate in Malawi and that through it they will be able to offer investments that produces real and competitive returns on transparent services.

"The company has the vision of becoming the customer's most trusted partner and is passionate about helping them to achieve their lifetime financial goals," he said.

Multifaceted benefits

General manager of Old Mutual Unit Trust Company, Khumbo Phiri, touted the unit trust as a portfolio of multifaceted benefits.

"The benefits of investment include diversification unit trusts are cost-effective way to access a share portfolio, convenience where investors are not tied-in and can access, switch and transfer their money at any time," he said.

Phiri said this is a package of investment products through which companies and individuals can invest their money and get a return.

"A unit trust pools together savings from like minded investors whose resources are invested on both the stock exchange and government securities market like treasury bills," said Phiri.

For example any corporate or individual with a minimum amount of K360 000 to spare is eligible to invest and enjoy the benefits of a collective investment scheme and he said there is no minimum limit to investments.

Unit trust explained

Phiri said this is a diversified value pack where when one puts his money in the unit trust, you get into several windows through one investment.

"A unit trust is a bank account with rewards like a treasury bill investment but with behaviour like that of a stock market," he said.

Phiri, however, attempted to clearly explain the difference of a unit trust to all other financial investment instruments.

"Unlike the stock market where there has to be a buyer available for people to get back their invested money and unlike government bonds and treasury bills where one has to wait for the expiry an agreed period of investment, unit trust are flexible and can be cancelled at any time," explained Phiri.

He summed it up by simplifying that unit trusts are 100% liquid and that the problem of buying or selling is theirs not the investor.

"The scheme is also very transparent with all fees disclosed when one is investing and even foreigners are free to invest in unit trusts as long as they have local bank accounts," he said.