Home Business Cytonn’s regulated fund up 17pc despite troubles

Cytonn’s regulated fund up 17pc despite troubles


Capital Markets

Cytonn’s regulated fund up 17pc despite troubles


DANDE

Cytonn chief executive Edwin Dande. FILE PHOTO | NMG

BDgeneric_logo

Summary

  • Cytonn Investment’s regulated pooled funds grew 17 percent to Sh960.2 million in the quarter to March 2021 despite challenges faced by the firm over its unregulated products.
  • The latest data from the Capital Markets Authority shows the firm had Sh819.4 million assets under management in December but has since grown to claim 0.8 percent market share.

Cytonn Investment’s regulated pooled funds grew 17 percent to Sh960.2 million in the quarter to March 2021 despite challenges faced by the firm over its unregulated products.

The latest data from the Capital Markets Authority shows the firm had Sh819.4 million assets under management in December but has since grown to claim 0.8 percent market share.

Despite the success in the regulated collective investment scheme, the firm is facing liquidity challenges in its unregulated products Cytonn High Yield Solutions (CHYS) and Cytonn Project Notes (CPN) after it failed to pay investors upon maturity of their investments.

The problems have led the regulator to issue advisory for investors to stick to regulated products.

“Investors to only invest through licensed and approved entities who offer and promote regulated products, to enable them to get the protection offered by the authority,” said CMA CEO Wyckliffe Shamiah.

Regulated pooled funds have become very popular for retail investors looking for options to put away little investments and be able to redeem the money within a couple of days.

Over the last three years, total assets held by Unit Trust Collective Investments Schemes (CIS) have grown by more than 80 percent and crossed the Sh100 billion mark in December.

The CMA says the funds have now grown six percent in the first quarter this year to hit Sh111 billion.

“As of March 31, 2021, the total assets under management by the CIS were Sh111.09 billion, a significant 6.08 percent increase from Sh104.71 billion managed in the quarter ended December 31, 2020,” said Mr Shamiah.

CIC Unit Trust Scheme led the pack with the largest portion of the funds at Sh44.76 billion, followed by Britam Unit Trust Scheme, which managed Sh14.15 billion in the same period.

Co-op Unit Trust registered the highest percentage increment of 36.22 percent, recording Sh1.3 billion up from Sh1 billion in December.

On the other hand, Amana Unit Trust funds recorded the highest decline, a 44.1 percent drop Sh75 million from Sh135 million.

CIS’s are approved pools of funds from the public and managed by licensed fund managers. They invest in diversified assets within restricted limits and are now widely available to the public.

These are small savers from as little as Sh5000 representing the broader economy and a wide range of aspiring individuals who lack the sophistication to invest in capital markets and so elect a unit trust to do so on their behalf.

They are safe in that they diversify investment stocks, bonds, or other approved asset types, conduct regular audits, and have a fund manager, custodian, and a trustee licensed by the regulator.

The CMA issued new guidelines in 2020 seeking more disclosures, updated asset valuations, and limits on investments in different asset classes.



Source link