The level of savings and investment in Uganda's capital markets has increased significantly despite the prevailing inflationary pressures, the Capital Markets Authority (CMA) latest quarterly report shows.
The report indicates that at end of June 2022, Collective Investment Schemes (CIS) Assets Under Management (AUM) grew by to Shs1.3 trillion.
The growth represents a 13.7% growth from Shs1.15 trillion registered at the end of March 2022.
The growth is attributed to increased awareness about the benefits of investing through CIS vehicles among local investors, investor confidence owing to a sound regulatory regime among other reasons.
In the same period, the total AUM for fund managers licensed by CMA also grew by 0.7% to Shs3.89 trillion from Shs3.87 trillion at the end of March 2022.
Speaking about the growth in AUM, Keith Kalyegira, CEO of the CMA highlighted that investing through a CIS makes the most sense during times like this when inflation is eating into the value of savings.
"With nominal returns on CIS funds currently averaging above 10% per annum, investors are able to preserve the purchasing power of their savings as the returns exceed the inflation rates," Kalyegira said.
He added that CIS’s offer a channel through which investors can earn a return on passive investments.
"CIS’s also ensure that Ugandans enjoy the benefits of having their savings managed by professionals. There are also the benefits of risk diversification, lower transaction costs, and access to a wide variety of securities investments with a small sum of at least Shs100,000. With a CIS, your securities can be sold when you deem it necessary, such as to pay school fees, in total or in part at any time.” Kalyegira noted.
According to CMA, there are five licensed CIS managers in Uganda.
These include: UAP-Old Mutual Financial Services Limited, ICEA Lion Asset Management Limited, Britam Asset Managers Uganda Limited, Xeno Technologies Uganda Limited, and Sanlam Investments East Africa Limited.