Old Mutual ups share capital in Unit Trusts
Touted as the first open-ended collective investment scheme, Old Mutual Unit Trust entered the Malawi market in September 2011 and is currently serving two products namely the balanced fund and the money market fund.
Old Mutual Malawi group managing director Chris Kapanga said the move was aimed at supporting the company’s growth over the long term, having noted the positive response from the public.
“The funds will go a long way in stabilising the company’s operations for the next four years, more especially making sure that we remain comfortably above minimum capital requirements as stipulated by the Reserve Bank of Malawi,” he said.
Old Mutual Unit Trust Company (Malawi) Limited joins the Old Mutual Malawi group which already comprises Old Mutual Life Assurance Company, Old Mutual Investment Group and property giant Mpico Limited.
The minimum capital requirement for unit trust business is currently at K15 million (about $90 000), according to the Reserve Bank of Malawi (RBM), as stipulated in the Securities Act (Establishment and Operations of Collective Investment Schemes) Directive 2010.
In a related development, the Unit Trusts Company has announced the reduction of its minimum investment amount to K100 000 (about $600) from K360 000 (about $2 155).
The company’s general manager, Khumbo Phiri, said they want to maximise financial inclusiveness opportunities to the public.
“We deliberately started on a higher minimum in order to control business flow. We took a cautious approach to ensure that we deliver good service as per our promise. After six months of operations, we have noted that we can now comfortably accommodate more volumes; hence, the move.
“This coincides with the public, regulators and governments call for financial inclusiveness which we are in full support of hence the lowering of the minimum,” said Phiri.
RBM spokesperson Ralph Tseka has welcomed the development, saying it will boost the operations of the company since the capital can be used for expansion to reach out to small investors countrywide.
“In addition, it would be easy for the company to introduce alterative products so that clients have a wide choice of investment avenues depending on their risk appetite and objectives,” he said.
But Tseka said the central bank is looking forward to a further reduction in the minimum investment so that many more low income earners can easily invest in Unit Trusts.
He said the from the regulatory point of view, the increase in the share capital will help to ensure financial soundness of the institution, increases investor confidence that client funds are protected and ensures stability in the financial system.
