Unit Trusts attract Rs 1.5 b new funds

Charumini DE SILVA

During the first ten months of this year the Unit Trust industry has attracted new funds over Rs 1.5 billion. The total funds under management are Rs 17 billion as at October 31 this year.

Speaking to Daily News Business Unit Trust Association of Sri Lanka (UTASL) Treasurer P Asokan said the industry was also able to collect around Rs 300 million every month during the past three months.

The growth funds recorded an average performance of 90 percent to 100 percent on year-to-date while the balance funds recorded 70 percent to 95 percent growth year-to-date.

The main advantage of this year’s budget to the Unit Trust industry was that the Government permitted direct foreign investments to any Unit Trust fund. Unit management companies will take up this opportunity and market their products overseas.

He said individual investors would be in a position to reap the benefits of the stock market through Unit Trusts. The Unit Trusts are professionally managed by fund managers and they have well diversified investment portfolios which provides a significant growth in the medium to long-term.

“Prior to the budget foreign investors were permitted to invest in growth funds provided they add a maximum investment restriction of 20 percent in Government securities. With the budget 2011 foreign investors can now invest in income funds, balance funds, growth funds and also index funds,” Asokan said.

He said with the interest rates expected to remain low, Unit Trusts provide an alternative investment for the investor to reap benefits of the returns available in the capital market.

“Therefore, we believe public will realize that they are dependent on interest rate would be futile.

It is good timing that the public should look for alternative investments to achieve a real rate of return. Thus, Unit Trusts could mobilize and attract these investors into the funds, which are managed by the professional fund managers,” he said.

“With Colombo Stock Exchange (CSE) performing well the Unit Trust industry has noticed that new investments are increasing especially in balance funds and growth funds. However with the slow interest rate regime there is a slow growth in the income funds,” Asokan said.