FUNDS under management (FUM) rose 472% to ZWL$14,23 trillion as at the end of June 30, 2023, largely due to increased property and money market investments, the capital markets regulator has said.
Financial institutions have what is known as assets under management, which is the entire market value of the securities owned or managed by the institution on behalf of its clients. Resultantly, FUMs can be used for investments.
Institutions are turning to property and money market investments as the equity markets remains volatile on the back of the depreciation of the local currency.
In its third quarter newsletter, the Securities and Exchange Commission of Zimbabwe (SecZim) reported that FUM average for the period ended June 30, 2023, stood at ZWL$565 billion.
“The Funds Under Management as at 30 June 2023 were ZWL$14,13 trillion, representing a 472% increase from ZWL$2,42 trillion reported as at 31 March 2023. The industry FUM average for the period ended 30 June 2023 stood at ZWL$565 billion. The year-on-year comparison shows a 1 066% increase in FUM from ZWL$1,21 trillion reported as at 30 June 2022,” SecZim said.
“The sector’s exposure to the stock market declined to 44,61% from 54% recorded in March 2023. However, sector exposure to property increased to 36,77% from 34,27% recorded in March 2023. There was also a marked increase in money market investments from 4,68% recorded in March 2023 to 10,59% recorded as at 30 June 2023. Increase in exposure to property and money market is largely attributable to divestment in equities.”
The capital markets regulator said private equity, cash/call deposits and bonds all accounted for the remaining 8,03% investment exposures for the asset management industry.
According to SecZim, the number of active registered collective investment schemes (CIS) stood at 51, dormant CIS stood at 17 and 11 registered CIS were not yet operational as at June 30.
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“Two new CIS were licensed during the quarter under review. The number of unit holders increased to 81 699 from 81 115 recorded in the previous quarter,” SecZim said.
“Collective investment schemes funds under management increased by 453% from ZWL$63 billion as at 31 March 2023 to ZWL$349 billion as at 30 June 2023. The increase was attributable to the inflationary impact on underlying investments, particularly equities.”
SecZim said total funds under management for the five CIS funds denominated in US dollars amounted to US$14,3 million. The asset management sector earnings were rated satisfactory for the period under review.
The industry total and average operating profit for the quarter amounted to ZWL$83,7 billion and ZWL$3,3 billion respectively, according to SecZim.
“Total operating profit for the industry increased by 1341% from ZWL$5,8 billion recorded as at 31 March 2023. Twenty out of 25 asset managers reported operating profits, while five entities recorded losses. The sector’s capital was rated fair,” SecZim added.
