BY CHIEDZA KOWO
UNIT trust funds outperformed the Zimbabwe Stock Exchange (ZSE)’s All Share Index during the first quarter of this year, according to a report by the Securities and Exchange Commission of Zimbabwe (SECZ).
Unit trusts are investment schemes that pool funds from different investors and invest according to pre-defined objectives set out in the prospectus for the fund.
The underlying investments can be in fixed income instruments, listed equities, property or other alternative investments.
“The latest edition of the GroWealth Unit Trusts Performance Survey shows that most unit trust funds outpaced the Zimbabwe Stock Exchange All Share Index and inflation in the first quarter ended 31 March 2021,” SECZ said.
“This is a positive outcome for unit trust investors as they enjoyed positive real returns above inflation, which was on a downward trend during the period under review, thanks to the stability on the exchange rate.
“The performance was driven by a bullish trend on the ZSE, which was up 70,27% for the first three months of the year.
“Fund managers who had superior stock-picking ability surpassed this average growth on the ZSE.”
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The survey showed returns from unit trust funds invested in listed equities growing between 65% and 104,71% during the first quarter, said the report.
It said balanced funds, the fund that can invest in both listed equities and fixed income securities, saw their returns range between 49,91% and 90,15% in the comparable period.
“On the other hand, the money market funds offered yields ranging between 3% and 46%, which remain below inflation,” said the report.
“However, should inflation continue on a downward trend, it is possible that fixed income funds may also start offering positive real returns in due course.
“Even on a monthly basis, most equity funds outperformed inflation and the ZSE performance in March, an indication of good stock selection by fund managers.
“On average the equities funds recorded a positive performance of 13,73% in March 2021 against the ZSE All Share Index performance of 8,05% and inflation at 2,26% in the month.
“To give investors choices in the multi-currency environment, some fund managers have recently started foreign currency-denominated (United States dollar) unit trust funds to cater for those investors with hard currency or nostro balances.
“This widens the available options in the market,” SECZ added.
