Call to re-introduce unit trusts

THE equity market sector has been urged to re-introduce unit trusts in a bid to further entrench financial inclusion in the society.

The call was made by Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube while addressing delegates at the inaugural Annual Financial Inclusion conference in Victoria Falls on Monday.

The conference, which ended yesterday was held under the theme “Leveraging Innovative Technologies for Financial Inclusion and Sustainability: From Access to Usage”.

Unit Trusts entail pooling of funds on behalf of a large number of investors, with each investor buying a certain number of units in a fund, representing their proportional investment from selected shares listed on Stock Exchanges, as well as money market instruments.

Additionally, the unit trusts endeavour to achieve maximum returns and provide potential for growth on investment over the medium to long term, making them a hedge against inflation through diversified portfolio investments to reduce investment risk.

The country used to have vibrant unit trust prior to hyper inflations era.

“We want to see more financial inclusion products in the equity market. There was a time when we used to have unit trusts, it was a financial inclusion product. The price of equities used have untised and broken down into little bits and where affordable to investors,” said Prof Ncube.

“However, we went through a hyper inflation period and that wiped that sector. But it must come back, therefore, I urge those who are in the sector to bring back unit trusts, they are a key pillar in financial inclusion in terms of equity investments for ordinary Zimbabweans.”

Prof Ncube said the exchange traded funds (ETF) launched a few years ago will promote financial inclusion and reduce the costs of trading on the equity market adding that there has been an introduction of REITS that brings another investment opportunity.

Early this year, ZSE launched the REIT Association of Zimbabwe which is targeted at this growing investment. That saw ZSE revealing that it is expecting to see more REITS listings as the sector is growing in Zimbabwe and beyond.

A REIT is a regulated investment vehicle under the Collective Investment Scheme Act that enables the issuer to pool investors’ funds for the purpose of investing in real estate.

In exchange, the investors receive units in the trust, and as beneficiaries of the trust, share in the profits or income from the real estate assets owned by the trust.-chronicle