Monday, July 11, 2016

How to Invest in Unit Trust Funds

What is a Unit Trust?

Unit Trusts are also known as collective investment schemes. They have grown in popularity in Kenya over the last two decades. There were virtually no unit trusts in 2001 but by 2016, there were 19 unit trust schemes registered by the Capital Markets Authority (CMA).

How do Unit Trusts Work

These investments are the small investor's answer to diversification without the need to have a large amounts of money to invest. In a unit trust fund, money from many investors is pooled together and invested in a portfolio of money market instruments, bonds, shares and other authorized securities depending on the fund's objectives. Investors are known as unit holders and the fund earns income by way of interest, dividends and capital gain when the underlying securities increase in value.

An investor invests in a unit trust fund by buying units at the prevailing price. The price is computed on a daily basis. Investors can sell the units back to the fund at the current buying price.

Management fees are charged to manage the fund, usually ranging from 1 - 3% of the fund balance annually. Some unit trusts also charge an initial joining fee of between 0.5 and 5% of the invested amount.

Registered Unit Trusts in Kenya

Unit Trusts in Kenya are legally referred to as Collective Investment Schemes. As at the time of writing, there were 19 collective investment schemes operating in Kenya. The types of funds and minimum investment amounts are listed below:



Name Type Minimum Investment
African Alliance Kenya Unit Trust Scheme Shilling Fund Kes 100,000
Fixed Income Fund Kes 100,000
Managed Fund Kes 100,000
Equity Fund Kes 100,000
Amana Unit Trust Funds Scheme Shilling Fund Kes 10,000
Balanced Fund Kes 10,000
Growth Fund  Kes 10,000
British-American Unit Trust Scheme Money Market Fund Kes 250,000
Income Fund Kes 250,000
Balanced Fund Kes 250,000
Managed Retirement Fund Kes 250,000
Equity Fund Kes 250,000
CIC Unit Trust Scheme Money Market Fund Kes 5,000
Balanced Fund Kes 5,000
Fixed Income Fund Kes 5,000
Equity Fund Kes 5,000
Commercial Bank of Africa Unit Trust Scheme Money Market Fund Kes 5,000
Equity Fund Kes 5,000
Diaspora Unit Trust Scheme Money Market Fund Data unavailable
Bond Fund
Equity Fund 
Dyer and Blair Unit Trust Scheme Diversified Fund Data unavailable
Bond Fund
Money Market Fund
Equity Fund 
Equity Investment Bank Unit Trust Scheme Money Market Fund Kes 1,000
Balanced Fund Kes 1,000
FCB Capital Unit Trust Scheme First Ethical Opportunities Fund Kes 2,000
Genghis Unit Trust Funds Balanced Fund Kes 500
Money Market Fund Kes 500
Equity Fund  Kes 500
ICEA Unit Trust Scheme Money Market Fund Kes 10,000
Equity Fund Kes 10,000
Growth Fund Kes 10,000
Bond Fund  Kes 10,000
Madison Asset Unit Trust Funds Equity Fund Kes 50,000
Balanced Fund Kes 50,000
Money Market Fund Kes 50, 000
Nabo Unit Trust Fund (Centum) Money Market Fund USD 50,000
Balanced Fund USD 50,000
Fixed Income Fund USD 50,000
Equity Fund  USD 50,000
Old Mutual Unit Trust Scheme Equity Fund Kes 50,000
Money Market Fund Kes 1,000
Balanced Fund Kes 50,000
East Africa Fund Kes 50,000
Bond Fund Kes 50,000
Pan Africa Unit Trust Scheme Money Market Fund (Pesa Plus Fund) Kes 2,500
Balanced Fund (Chama Plus Fund)  Kes 2,500
Stanlib Unit Trust Scheme (formerly Stanbic) Money Market Fund Kes 10,000
Bond Fund Kes 10,000
Equity Fund Kes 10,000
Balanced Fund  Kes 10,000
Standard Investment Unit Trust Scheme Equity Growth Fund Kes 5,000
Fixed Income Fund Kes 20,000
Balanced Fund  Kes 20,000
UAP Investments Unit Trust Scheme Money Market Fund Kes 250,000
Equity Fund Kes 250,000
Fixed Income Fund Kes 250,000
Zimele Unit Trust Scheme Balanced Fund Kes 5,000
Money Market Fund  Kes 5,000

Unit Trust Tips and Warnings

Before deciding to invest in a unit trust, you must pay close attention to the following:

  • The investment objective and strategy
  • Investment limits
  • Current portfolio
  • Recent performance
  • Past performance i.e. over 12 months
  • Specific features and constraints conflicting with your needs or preferences e.g. minimum investment amount or initial charge 
  • Shareholders, board of directors and key management staff
  • Financial strength, track record and expertise 
Suggested Reading
How to invest in the Nairobi Stock Exchange

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