Over the past few years, Ugandans, especially the working middle class, have either established or joined investment clubs or unit trusts as a way of mobilizing savings collectively for investment.
The main is that once the investment is made as a group, the returns would be higher than if it were made at the individual level. However, the risk would also be spread across many people.
Some of these groups have been registered as companies or associations, owing to the fact that there is no specific law that provides for registration of investment clubs.
In Uganda, unit trusts are managed under the supervision of the Capital Markets Authority (CMA), a government body that regulates and promotes the development of capital markets.
So, it is for this reason that CMA has created a deliberate strategy to promote these untapped unit trusts. This was revealed by Charles Nsamba, the CMA public relations manager during a public dialogue with various stakeholders as part of events to mark the 2019 Capital Markets Week (CMW) on Monday.
The concept is part of the CMA development master plan, So, one may wonder how unit trusts address the fears of investment security while still allowing one to save within a group.
“For starters, unit trusts are one sure way of enabling small savers to invest in several products or assets indirectly,” says Nsamba.
“This in itself gives a saver the comfort that their investment will be safe. Unit trusts operate under a legal structure, with a manager being the client facing entity that also possesses the professional expertise to make investments in line with the firm’s investment strategy.”