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SECZ to clamp down on asset managers

THE Securities and Exchange Commission of Zimbabwe (SECZ) will this week begin an inspection exercise of asset management companies with a view towards ensuring compliance in presenting audited results.


SECZ officials last week expressed concern at the almost absolute lack of presentation of audited results from as far back as 2009 by asset management companies.

SECZ head of supervision and surveillance, Norman Maferefa said inspection would begin in earnest from this week.

“We have noted with concern that a number of unit trusts have outstanding audits since 2009, only a few firms have adhered to regulations, the house is not in order,” he said.

“This is not acceptable. By the 30th of June we expect to have audited accounts backdated to 2009, there should not be any exceptions,” said Maferefa.

Unit trusts are shared funds that permit private investors to pool their capital in a single fund, thereby distributing their risk across a range of investments while benefitting from professional management, and cheaper dealing costs.

They are an open-ended portfolio of assets such as equities, bonds, cash and listed property, in which investors can purchase units.
Pricing changes daily, and is determined by the net asset value of the portfolio’s underlying investments.

The success of a unit trust usually depends on the proficiency and skill of the management company.

However, some asset management companies in the country are subsidiaries of holding companies where decisions with regard to the operation of the unit trust are made at holdings level.

But SECZ chief executive officer, Tafadzwa Chinamo said that under exceptional circumstances and where books of accounts are in order, there would be a platform to engage.

“It doesn’t augur well for the industry that a lot of companies have not been auditing accounts. It doesn’t sit well with us as regulators at all,” he said.

“We can’t change rules or laws of unit trusts. If the business is not making sense or is not viable, wind it down. We can’t overlook such pertinent issues that involve use of public funds,” he said.
The potential rate of return on investment in unit trusts is presently bogged down by trustee fees, custodial fees, audit fees and bank charges.

A number of companies suspended trading in unit trusts in November 2008 citing difficulties in the movement of funds between banks and in trading on the Zimbabwe Stock Exchange.

The economic stability brought about by the introduction of a multiple currency regime restored investor confidence in the economy, leading to the starting up of various unit trusts to date.

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