Currently, the fund is invested in Old Mutual plc (OML), NBS Bank, TNM plc, FMB, Standard Bank, National Bank of Malawi and Illovo Sugar (Malawi) Limited. This position, however, changes from time to time to reflect performance projections of individual stocks.
In an exclusive interview on Wednesday, the companyâ€™s general manager Khumbo Phiri said that the balanced fund, currently managing funds worth K170 million, is at any given time, invested in the best performing company shares.
He said if one share goes up in value, the number of units remains the same but the value goes up which also pushes up the average price of a unit. March saw all the seven company shares going up, thereby multiplying the unit price growth effect.
“The balanced fund invests in interest bearing assets of up to 55 percent, equities up to 40 percent, cash and fixed deposits up to five percent. So the 40 percent is what has driven up the price.
Phiri observed that clients in the balanced fund are advised to invest for a few years if they are seeking reasonable capital growth through investing in this fund but was quick to say that investors are not tied to any particular period.
According to the balanced fund price trend, as at March 1 2012, the fund class A, B and C were at 201.23, 200.82 and 200.59 tambala per unit, respectively. These went up to 209.09, 208.36 and 207.98 tambala per unit as at the end of March. This made March register the fastest growth of balanced fund prices in its history.
Meanwhile, the unit trusts fund has peaked at K300 million (about $1.8m) as of end March, according to Phiri, with individual investors leading the pack but that corporates have higher values in terms of assets.
Unit trusts, a new phenomenon in Malawi, has a number of advantages that include diversification in that the trusts are a cost-effective way of accessing a share portfolio, convenience where investors are not tied inâ€” can access, switch and transfer their money at any time.
There is also transparency in the performance and all the charges applicable. Unit Trusts are also high on liquidity because money due to the investor is available in the short term.
In the Old Mutual Unit Trusts, investors can open different accounts such as individual and corporate accounts.
Phiri has advised the investing public to consider investing in unit trusts because of competitive yields despite the fact that disinvesting is possible and prompt with no hassles.
Currently, the minimum investment has been revised downwards to K100 000 (about $600) from K360 000 (about $2 155) for each type of trusts to enhance financial inclusiveness. This according to Phiri, helps more people to access the benefits of Unit Trusts.