Fund managers see growth as virus revives Kenyans’ savings culture

CIC Asset Management oversees the biggest portfolio of assets under management. By the end of last year, it led in the collective investment schemes, managing Sh29.7 billion, a 396 per cent market share.

This is set to rise over the pandemic period as people seek investment opportunities offering favourable returns, low-risk and ease of access to funds during the uncertainty occasioned by Covid-19. Financial Standard spoke to CIC Asset Management Managing Director Stanley Mutuku on the industry trends and more.

What are unit trusts and why would you say they are a favourable investment option?

This is a collective investment scheme (CIS) where individual members come together pooling money into a pot for purposes of investment. Under the guidance of a professional money manager on how and where to invest.

It’s one of the most convenient, safest and accessibility of money is easy. It also allows flexibility as you can invest as low as Sh5,000 to start, but continuously top up a minimum of Sh1,000 even using your phone. CIS takes the same concept of a chama where people come together because, with more money, they have better negotiating power and are able to do bigger things.

Just over five months in, how has the Covid-19 pandemic changed asset management?

We need to be versatile in the way we model the distribution of our business in terms of engagement, and technology plays a big part. We’ve been able to engage with our customers virtually without any hitch through email, web portal and mobile platform. We’ve also come up with a robotic chat application where clients get a response immediately.

Has the pandemic impacted the business positively or negatively?

For CIC, we can say it’s been positive as you can see it in the numbers. One of the reasons is that people whose businesses stalled had idle cash, which found its way into our investment plan and that’s why our growth was enormous.

Our diverse customer base has also grown, and we have customers who would want to invest in a protected currency such as the Euro and the US dollar. We’ve already engaged the Capital Markets Authority (CMA) for the approval of a fund to be known as the CIC Dollar Fund, which invests in the US currency.

We have already got consent to register the product. There’s a big population that is paid in dollars, and there are also people in the diaspora who don’t want to suffer the loss in terms of exchanging the currency.

Has the pandemic revived the savings culture?

We’ve seen a maturity from Kenyans in managing money now. Kenyans were more of consumers than savers, and there were some industries that people thought would never close. So an emergency fund has become very important at the personal and company level as people realised they need a buffer.

With relief measures such as the reduction of Pay As You Earn (PAYE) by five per cent, people have found themselves with a surplus, which they can now save. This where collective investment schemes come in as from the savings, people are able to get value from their money for a particular timeframe.

As you earn, save, and those savings should be able to get value and this value must be maintained over the period of saving that money. 

The pandemic has battered the markets, and an economic slowdown is expected in the coming years. Is this a source of major concern for asset managers?

It’s a concern. We take our clients through education so they understand why they are investing in the stock market or money markets-related funds. People who invest in equity funds and balanced funds, which have an exposure in the stock market, are more of medium and long-term investors, and so the worry is not that much.

We also take them through the risk profile and so know volatility. The return for the funds is dividends quarterly or yearly. The pandemic is also good for investors as they can buy cheaply and can take positions they otherwise couldn’t have taken.

Will this growth continue?

We still foresee continuous growth during this period. There are other factors we can consider, such as people not paying school fees and they can invest it in the schemes putting it to work as they wait for schools to reopen.

Will government securities continue being popular with fund managers? Based on the history of investors burning their fingers, there’s a reason for the preference for government papers. They are safe as it is guaranteed they’ll be paid.

 wwambu@standardmedia.co.ke