Dry Associates targets the deep-pocketed with Sh1 million unit trusts

Dry Associates Ltd managing director James Dry. The investment firm has been approved by Capital Markets Authority to register a series of unit trusts. PHOTO | NMG

Nairobi, Thursday, January 7

Dry Associates Ltd (DAL) is set to open a unit trust scheme targeting the deep-pocketed with a minimum investment of Sh1 million.

The investment bank will sell the unit trust funds through a shilling money market fund, dollar money market and balanced funds.

Those opting for the dollar money market fund will be required to put an opening $10,000 (about Sh1 million), with the option to top up the investments in multiples of $1,000 (Sh100,000).

The top up is lower than the Sh250,000 required for local-based investments.

“Dry Associates has been approved by Capital Markets Authority to register a series of unit trusts. We anticipate these unit trust funds will be available to investors in January 2016,” said the firm in its December report.

DAL estimates it will give a return of 15 per cent to investors who choose the fund that invests in domestic government securities and a lower five per cent for offshore securities.

The balanced fund will put money in risk-free government securities, equities and property. It will have a higher management fee of three per cent annually, which the firm attributed to administrative costs.

“The management fee is a slightly higher three per cent per annum with an early redemption penalty to reflect the additional attention required to manage this portfolio,” said the firm.

It is charging an annual management fee of 1.5 per cent for investors in the dollar-denominated fixed asset class and two per cent for local money market.

Dry Associates will be going against the grain, with other fund managers striving to attract small investors to unit trust schemes by lowering the minimum investment amount from upwards of Sh100,000.

Stockbrokerage Genghis Capital opened its trust with a minimum investment plan of Sh500 two years ago following in the path of Zimele Asset Management’s Sh250 and Old Mutual’s Sh1,000.

The Apollo Asset Management Company, which just received its license early this week, has put its entry point at Sh10,000.

Unit trusts provide investors with an opportunity to invest in a portfolio of stocks or fixed-income securities or both, without directly going to the market themselves.
The investors deposit money with fund managers who charge them a fee for their services.

They provide an option for investors looking for higher returns than those offered by commercial banks for cash deposits, and who are not willing or able to keep tracking their investments.

DAL said it will be working with Co-operative Bank as its trustee and Bank of Africa as custodians.

Source: Business Daily