First International Collective Investment Scheme Launches in Uganda

Ugandans are now able to invest in the international financial markets for as low as 100 UD Dollars (370,000 shillings) following the launch of the first offshore mutual fund products in Uganda’s financial industry.

Standard Chartered Bank says that this proposition will provide the clients with an affordable and diverse way to put their money to work “in some of the world’s most promising markets”. 

‘Mutual funds’ is a general term for funds that allow investors to pull their money with that of other investors and are managed by a team of investment professionals, largely like collective investment schemes, unit trusts or simply as funds. 

In this case an offshore mutual fund allows Ugandans to pool their resources with other investors globally, and the funds can be invested in dollars, British Pounds, euros of other financial assets using a simple monthly plan.  

“The pooling of money generally creates greater buying power so investors are able to invest in a wider range of investments than would be possible for most individual investors, while each investor in a fund owns units or shares which represent a part of a fund’s portfolio holdings,” says Standard Chartered. 

Keith Kalyegira, the Chief Executive Officer at Capital Markets Authority says the advantages of this product goes beyond returns but opens Uganda’s to more knowledge about financial investments, as well as diversifying into foreign assets. 

Related products have been sold in the country but directly by the foreign companies, but this is the first to be licensed in the country, according to Kalyegira. 

According to Kalyegira, apart from dealing with a global and licensed platform, a licensed international platform gives confidence that it will help minimize fraud or illicit finance and money laundering.   

Standard Chartered Bank says that this proposition enables the bank’s clients to access hundreds of underlying equities or bonds from recognized and well-established (blue-chip) companies in the US, Europe, UK, Asia and emerging markets in different sectors like healthcare, technology, real estate and green (climate-related) investments.

Investing in mutual funds also ensures that clients will easily and conveniently invest their funds but also as well cash out their investment at any time at market value.   

On the security of the fund, Sanjay Rughani, the Chief Executive Officer, Standard Chartered Bank Uganda says the investors are given chance to discuss the risks involved before they release their money, but adds that the base of more than 770 billion dollars of the fund means individual investors are assured of return. 

In the event that an investor decides to withdraw from the investment, the products provides for a free exit at which point their money would be returned at the current market value, not necessarily what was invested. 

The Fund has two different products, with AB American Informal Fund allowing investments of as low as 100 dollars, while the AB Global High Yield Fund that is a high-paying fund but requires investment of not less than 5000 dollars.   

Lydia Nakamya the General Manager, Affluent Banking and Wealth Management, says that therefore, the higher the investment product taken, the higher the returns, of between 6 and 8 percent per year. 

Standard Chartered says there are several products on the market but that they are looking at attracting more and more of low income earners like youths, adding that with time, they will get Uganda shilling-denominated investment funds.   

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