The expansion of fund managers persists, propelled by the growing interest of retail investors in actively managed investments.
According to data from the Capital Markets Authority (CMA), five new fund managers have entered the industry in the 12 months ending September this year. During the same period, the markets regulator approved the launch of 12 new unit trust products.
The newly licensed fund managers are Lofty Carbon Investments Limited, CPF Asset Managers, Spearhead Africa Asset Management Limited, ALA Capital Limited, and MKM Capital Limited.
The majority of newly approved products have focused on fixed-income funds and dollar funds, reflecting investor interest in government securities’ returns and forex gains due to a weaker local currency. Fund management fees typically average about two percent of assets under management, meaning a fund manager will ideally earn KES 2,000 for every KES 100,000 invested by a client. The more assets a firm manages, the more fees it collects.
Zimele CEO Isaac Njuguna notes that fund managers are targeting the opportunity presented by millions of retail investors seeking to save and invest through active intermediaries. He emphasizes that the industry, considering approximately 25 million Kenyan adults, many of whom are ordinary savers and investors, is not saturated with fund managers.
Despite offering similar products, fund managers face competition for differentiation in the marketplace. The industry’s transformation is deemed possible if fund managers can connect with the wider market, according to Njuguna.
Data from the CMA indicates that the value of assets under management by collective investment schemes or unit trusts was KES 175.9 billion in the quarter ending June, a 1.7 percent increase from KES 164.2 billion at the end of March. The regulator listed 27 unit trust schemes, with CIC, NCBA, and Sanlam leading in assets under management with market shares of 17.4 percent and 10.3 percent, respectively.
The fund management business proves lucrative for investment firms, with CIC Asset Management, for instance, booking KES 1.1 billion in fund management fees in 2022. The CMA asserts that the fund management space remains attractive to players who can innovate and differentiate themselves. CMA Chief Executive Wycliffe Shamiah emphasizes the regulator’s perspective, aiming to have fund management services available as much as possible, with each fund manager targeting a specific segment of the market.
