As inflation and interest rates drop:

Unit Trust stable and secure

Ceylon Asset Management, Managing Director, Dulindra Fernando said the Unit Trust industry is stable and secure for investors as inflation and interest rates decreased with the national economy recording a positive growth.

With the dawn of peace, the Unit Trust industry growth has increased immensely.

The mass market has realized the potential of the stock market since the Unit Trust is one of the safest financial instruments where people could invest in while getting a higher return on their investments.

With the economic developments taking place in the country the former volatile situation in the financial sector has ceased and at present there is a positive impact that Sri Lanka will experience rapid economic growth within three years, he said.

He said the Colombo Stock Exchange (CSE) has modified its laws and regulations to list Unit Trusts managing companies in the CSE.

The companies, which wish to list in the CSE and the companies, which are already listed in the CSE, will enjoy profits as investor confidence has improved. Tourism, banking, mobile phones and the construction sector will record a rapid growth in the near future.

When Unit Trusts were first introduced to Sri Lanka in 1992 the prevailing war situation impeded the growth of the financial sector and we were unable to promote Unit Trust Funds among local and foreign investors.

China and India also launched Unit Trusts at the same time when Sri Lanka introduced Unit Trusts and they have made speedy advances. Since peace and stability has returned to the country we too will make headway in the coming year, he said.

Creating awareness among people is very important since people have lost confidence with fake financial institutions.

The Securities Exchange Commission (SEC) will introduce specially designed Unit Trusts for the rural community next year since communities in remote areas have reposed confidence in Unit Trusts as a secure alternative financial instrument, he said.

At present foreign investor participation has been limited, but we hope that in first few months of 2010 there will be more foreign participation in the Unit Trust industry.

The future of the industry is very positive. The number of rural and foreign investors will increase further while getting higher returns on their investments.

National Asset Management Limited (NAMAL), CEO, S. Jeyavarman said the Unit Trusts are an alternative financial instrument with less risk and that they look forward to more investment opportunities and investors to popularize it among the public.

Most people have not understood the concept of the Unit Trust due to lack of advice, but compared to the previous years investors have shown a good response.

With the reduction of interest rates we hope to attract more foreign investors to invest in Unit Trusts, as the participation of foreign investors has been limited.

He said the quality, services and standards of the Unit Trusts has to be developed further. It is good to have safe alternative financial instruments and to expand the industry increased awareness programs are important.

The public has recognized the potential in the Unit Trust industry and this will be an excellent gateway for companies who wish to list on the CSE to raise capital.