Sri Lanka's Guardian Acuity Asset Management Launches Two New Unit Trusts

25th January 2012, www.ft.lk

The country’s unit trust industry, considered to having high potential and viewed as catalyst for widespread capital market, will see the launch of two new additions with its promoters and managers promising a choice of good, reliable and flexible returns via solid investments.

The SEC approved two unit trusts are branded MoneyMax and MoneyMaker. They are promoted by Guardian Acuity Asset Management Ltd., a joint venture fund management company formed by Ceylon Guardian Investment Trust Plc of Carson Cumberbatch Group., and Acuity Partners Ltd., the investment banking arm of HNB and DFCC. The new investment opportunities comprise a fixed income fund and an equity growth fund.


MoneyMax has several options depending on the requirement of the investor. MoneyMax Dhaksha is aimed at those wanting solid returns to finance children’s education, MoneyMax Dheerga for senior citizens or those saving for retirement and MoneyMax Pragathi for investors wanting money to start up a business.
The promoters said the three products were launched following research, which revealed that people were saving or investing for retirement, finance children’s education or to start up a business.

These savings plan combine a mix of equity and fixed income investments in appropriate mixes depending on the time horizon preferred by each investor. For the more sophisticated investor Guardian Acuity Asset Management Ltd. (GAAM) has on offer an investment plan named MoneyMaker which gives the choice to decide his or her own risk level with a suitable combination of equity and fixed income investments.
Further strengthening the concept of long-term investing, the savings plan allow for periodic topping up of investments on a regular basis. This, the promoters said, encourages the savings habit among investors
Flexibility to switch between funds at no extra costs allows investors the freedom to vary their equity and fixed income investment proportions to suit their risk taking ability as well as volatility in stock prices and interest rates.

GAAM’s entry is into a seemingly crowded market funds wise as there are around 24 unit trust funds. However, despite being in existence for two decades, the unit trust industry hasn’t penetrated or marketed sufficiently. The country has only around 27,000 unit trust holders whilst the fund base is Rs. 23 billion, less than 1% of the total bank deposit base.

HNB Managing Director and CEO Rajendra Theagarajah said that GAAM has taken cognisance of some of the challenges as well as opportunities. “By making the minimum investment at Rs. 1,000 with no entry fee, we have addressed the affordability aspect,” he said.

With regard to marketing it to a wider investor base, Acuity Partners Group CEO Ray Abeywardena said initially 65 branches of the HNB covering all provinces would aggressively promote the new funds in addition to GAAM’s own team of personnel.

Ceylon Guardian Investment Director Chandima Gunwardena said the portfolio of opportunities from GAAM were market structured mechanisms backed by sound and proven management expertise so as to offer good returns for discerning medium to long-term investors.
The promoters said that unit trusts were a good medium for the saving public to tap the opportunities arising from the equities market. It was revealed that over a 10-year period ended in 2011, investing in equities had provided greater returns as opposed to fixed income option though the former had demonstrated some degree of volatility.

Other advantages of investing in unit trusts are benefits of professional fund management input, diversification, liquidity and tax exemptions.
Ceylon Guardian Group has an investment portfolio of Rs. 30 billion comprising equity and private equity investments. Acuity Group provides a suite of investment banking products and services, including stock broking, primary dealership, corporate finance, venture capital and financial advisory services with an asset base of nearly Rs. 6 billion.

Related Info :

• Sri Lanka Acuity Partners & Ceylon Guardian Investment Trust to Set up a Firm to Run Mutual Funds

• How to Invest in Unit Trusts - Introduction to Sri Lankan Unit Trust Industry

NAMAL Unit Trust Management Company Launches IPO Fund to Capture Potential Upside and to Benefit from Preferential Allocation of 10pct

27th July 2011, print.dailymirror.lk

National Asset Management Ltd (NAMAL), the pioneer Unit Trust Management Company in Sri Lanka announced the launch of the NAMAL IPO Fund. The Fund has been launched to capture potential upside on mispriced IPOs (initial public offerings) as well as to benefit from the preferential allocation of 10% of the offered shares to the Unit Trust Investor Category.

The fund will invest at the IPO offering stage and in post-IPO securities for a period of one year.

The Fund is targeted at retail investors with a minimum investment of Rs. 10,000 and will enable retail investors to obtain a meaningful allocation without the hassle of applying for each individual IPO and obtaining bank guarantees.

Avancka Herat, Executive Director of NAMAL, stated that “Retail investors have faced a significant challenge in evaluating IPOs in recent times.

With many IPOs in the pipeline in the next few years, Investors in the Fund will benefit from the professional selection of IPO securities and portfolio management by NAMAL’s experienced fund management team”.

Unique features of the NAMAL IPO Fund are that it would invest in the post-IPO stage and in other equities in the market if the managers think that IPOs are not properly valued thus ensuring equity exposure for investors. The NAMAL IPO Fund will not charge an exit fee to investors even if they redeem within a short period of the initial investment. The NAMAL IPO Fund is licensed by the Securities & Exchange Commission of Sri Lanka as an open-ended Unit Trust.

Charana Jayasuriya, Head - Sales & Structuring stated that “NAMAL IPO Fund joins the portfolio of open-ended unit trusts managed by NAMAL with different markets strategies and risk return objectives. NAMAL will continue to launch new opened ended funds to increase the range of individual investment options.”

Established in 1991, as the first Unit Trust Management Company in Sri Lanka, NAMAL has a 20-year track record of successfully investing in the Sri Lankan equity and debt markets. The flagship National Equity Fund has generated 16.9% annualised return for the last 19 years. NAMAL operates eight Unit Trusts including NAMAL Acuity Value Fund, the only listed Unit Trust, and the NAMAL Amana Fund, the only Shari’ah compliant Unit Trust.

In February 2011, Union Bank of Colombo PLC purchased 51% of NAMAL with Ennid Capital (Pvt) Ltd, an investment arm of Singapore based BP De Silva Holdings purchasing 19%. With founding shareholder DFCC Bank retaining a 30% shareholding, NAMAL is backed by the financial strength and stability of two of the leading banks in Sri Lanka. S Jeyavarman, CEO, stated that NAMAL Unit Trusts are now available from all Union Bank branches, as part of the strategy to offer new investment products to suburban and rural investors.

Related Info :

• Sri Lanka’s First Unit Trust Company NAMAL Leverages Market Position with Backing from Union Bank

• NAMAL Acuity Value Fund Declares First Dividends

• How to Investing in Unit Trusts - Introduction to Sri Lankan Unit Trust Industry

• Other Links on Funds and Unit Trusts

First Ever IPO Fund in Sri Lanka Launched by Ceylon Asset Management

22nd June 2011, www.dailynews.lk, By Sanjeevi Jayasuriya

The country's first ever IPO fund was launched yesterday with focus to broadbase investor strength especially regarding retail investors. The Fund will invest only in IPOs in Sri Lanka providing an opportunity for the retail investors to increase their share purchasing powers at IPOs.

We do not invest in the stock market and the investors are guaranteed a fixed return on their investment, Ceylon Asset Management Managing Director Dulindra Fernando told the Daily News Business.

“Asia has a fast growing IPO market with two third growth coming from this region. The IPO companies represent new Sri Lanka and there will be an IPO boom in the country in the next five years,” he said.

The lull period in the Sri Lankan IPO market for the past decade due to war is now having an upward movement and there are a large number of IPOs in the pipeline.

“These companies secure funds to expand in the fast growing sectors in the Sri Lankan economy and markets. This will fuel the golden era of fast GDP growth, ” Fernando said.

The fund will offer direct exclusive opportunity for retail investors where its returns will not be subject to the volatility in the stock market. A special promotional offer of Rs 1,000 investment will be there to encourage the retail investors where the Units are offered at Rs 10 each.

Ceylon Asset Management (CAM) and Deutsche Bank AG have joined hands to launch the IPO Fund to exploit an opportunity created by the Security Exchange Commission of Sri Lanka (SEC).

The SEC has passed legislation that reserve 10 percent of each IPO for eligible Unit Trusts.

The tax-exempted Unit Trust is designed to safeguard capital investors while generating tax-free interest income by investing all excess cash in short term fixed income instruments.

The Fund will accept investments upto a maximum of Rs 10 million where several high profile IPOs are expected during this year.

Related Info :

• Ceylon Tourism Fund to Benefit by Sector Boom. Banking & Tourism to Top Colombo Stock Exchange in 2011

• How to Investing in Unit Trusts - Introduction to Sri Lankan Unit Trust Industry

• IPOs on CSE Must Allocate 40pct Shares to Retail Investors, Sri Lanka's Markets Regulator Decides. 10pct Offer to be Made to Unit Trust Funds

• Sri Lanka Unit Trusts Attract Rs1.5bn New Funds in First Ten Months of 2010

High Returns on Unit Trusts of Sri Lanka Attract New Funds

16th May 2011, www.dailynews.lk, By Charumini de Silva

During the first quarter the unit trust industry attracted a total of Rs 1.3 billion new funds. The majority were for the income funds and equity funds, Unit Trust Association of Sri Lanka (UTASL) Treasurer, P.Asokan told Daily News Business.

“It is important to change the traditional mind set of the public from savings to investments. Majority of the people are unaware of the unit trust concept. They invest their funds more in fixed deposits and bank savings. With the interest rates brought down drastically, people are now looking at alternative investment methods,” he said.

Increasing collections especially from small scale investors apart from large scale investors to the unit trust industry is vital for their long-term objectives.

He said many of the people depend on the income of interest rates that they get for their deposits. With reduced interest rates the public should look at long-term investment opportunities such as unit trust for higher returns.

“We are confident that the industry will have the capability to record strong growth supported by corporate earnings growth. Although the price levels of some equities have not increased mainly due to market speculators investing in illiquid equities; the investors who are keen on fundamentally good stocks can enjoy a high and a sustainable dividend yield for their long-term investments,” Asokan said.

“As industrialists we suggest the Government to introduce such incentives or to invest part of the EPF and ETF funds in unit trusts as members handle the risk and the return on investments are higher,” he said.

Related Info :

• Sri Lanka Unit Trusts Manage Rs22bn in Assets. Public Awareness a Must for Participation in the Economic Growth

• IPOs on CSE Must Allocate 40pct Shares to Retail Investors, Sri Lanka's Markets Regulator Decides. 10pct Offer to be Made to Unit Trust Funds

• How to Investing in Unit Trusts - Introduction to Sri Lankan Unit Trust Industry

How to Invest in Unit Trusts - Introduction to Sri Lankan Unit Trust Industry

09th May 20111, www.dailymirror.lk

Unit Trusts were introduced to Sri Lanka in 1991 to provide an alternate investment for the people of Sri Lanka to benefit from the capital market.

The Securities and Exchange Commission of Sri Lanka (SEC) as the licensing authority has the power to permit a Fund Management Company referred as Fund Manager to launch a unit trust under the SEC Act.

In real life, the Fund Manager has to formulate a fund with an objective in mind before seeking an approval from the SEC. The objective of a fund can be for example growth, income and growth or income only and the strategy to achieve the objective needs to be worked out by the Fund Manager to deliver results with in the expected time frame. As the investments of the fund are focused on the specific financial instruments, the fund management company also needs to select authorised investments to suit the type of objective of a fund.

The Fund Manager needs to submit an Explanatory Memorandum (EM) and a Trust Deed to obtain the license from the SEC to launch and operate the Fund. The EM provides necessary information about the Fund offer, the Fund Manager, Trustee and other relevant investor information. The Trust Deed gives details of the formation of the trust and its deposited property, registration process of the investors, dividend distribution, areas of intended investment of the Fund’s assets, appointment of auditors, covenants of the Manager and the Trustee, procedure for a unit holder meeting etc. The Trustee usually a reputed bank and provides services and acts as the beneficial owner on behalf of the investors in the fund.

There are six fund management companies operating in Sri Lanka and more are expected to be licensed. Further there are 22 funds operating in the market managed by the six Fund Managers. Now let us look the advantages for small investors to invest through a unit trust.

Growth Funds
We assume you are an investor who wanted to invest in a Growth Fund to participate in the shares listed in the Colombo Sock Exchange.

Growth Fund is a fund primarily invests in shares to achieve long term growth of capital to the investors.

There are over 240 companies listed in the Colombo Stock Exchange and it is practically difficult for small investors to research and identify good stocks with reasonable valuations. It makes it more difficult to monitor the performance of stocks they buy and hold for longer term. The unit trust managers make it easy for the investors as they undertake the selection of shares and monitor the performance of the underlying companies over time. In addition the Managers also provide other services to the investors to make investment in shares a hassle free affair in the day to day life. The investors enjoy a host of benefits by investing through a unit trust.

They are:
• Expert professional fund management at lower cost
• Diversification of your investment in many shares ( Do not put all your eggs in one basket)
• Low minimum investment level
• Excellent long term prospect
• Protection by independent Trustees
• Easy to buy and sell or transfer
• Invest jointly with minors
• Choice of investments and transferability among funds
• Tax free income

How to invest in Unit Trust?
There are many unit trusts available in Sri Lanka and investors can contact the Fund Management Company and obtain an Explanatory Memorandum and an application form to open an account and to make an initial investment. Consider charges and the performance of different unit trusts and their track records.

Shares and equity unit trusts can fall as well as rise, so you should aim to hold for at least five years.

Consider how much you can afford to invest and how often. It is prudent to keep some money in bank and short term fixed income instruments for unexpected emergencies.

You can usually choose to make your payments by cheque, direct credit to the designated bank accounts, standing order or any other means recommended by the Fund Manager.

Regularly check the statement or reports from the Fund Manager to track the progress of your investment. You can also follow the daily prices of your units in the news papers or visit the website of the Fund Manager.

When you need any help or clarification you can contact the Registrar or relevant officer who will offer advice on their range of trusts.

Solving financial planning needs
You can redeem your units on any business day and receive the proceeds within short periods. However, unit trusts works best for you as a long term investment rather than a short term punt.

You can switch between different types of funds – for example from high to low risk, or growth to income etc.

You can build up savings by re investing dividends and through regular savings.

Types of Unit Trusts
There are different types of Unit Trusts available in the market. Let’s see some of them:

• Growth Funds: Growth Funds are higher risk funds offer higher return prospects to the investor. These funds invest higher proportion of its money in listed shares. There are many Growth Funds operating in the fund. Some of the funds distribute dividends and others do not.

• Balanced Funds: Balanced Funds are moderate risk funds offer dividend and growth prospects to he investors. These funds invest around 50-60% of its money in listed shares and the balance in selected fixed income securities. These funds often distribute dividends annually based on the fund performance.

• Income Funds: Income Funds are low to moderate risk funds depending on the short to long term investments in debt instruments and allocation between government and corporate debt instruments. This fund pays annual or even quarterly or half yearly dividends. Often it is classified as an income fund with less prospects to grow. However at times of volatile interest rate environment these fund can offer growth prospects as well.

• Index Funds: Index Funds are more passive form of fund and tracks an accepted index. With negligible tracking error, these funds can offer higher upside when the underlying index rises.

There are many other specialized unit trusts, operating specializing in sectors such as money market, Sharia compliant Islamic and sub sectors of the stock market.

Related Info :

• Market Indicators of Unit Trust Funds - The Unit Trust Association of Sri Lanka

• Sri Lanka Unit Trusts Manage Rs22bn in Assets. Public Awareness a Must for Participation in the Economic Growth

• Sri Lanka Unit Trusts Attract Rs1.5bn New Funds in First Ten Months of 2010
• IPOs on CSE Must Allocate 40pct Shares to Retail Investors, Sri Lanka's Markets Regulator Decides. 10pct Offer to be Made to Unit Trust Funds

• Sri Lanka’s First Unit Trust Company NAMAL Leverages Market Position with Backing from Union Bank
• Ceylon Tourism Fund to Benefit by Sector Boom. Banking & Tourism to Top Colombo Stock Exchange in 2011

• Saudi Arabian Heraymila Investments of Al Mashal's Start a Fund to Invest in Listed Sri Lankan Companies

Sri Lanka’s First Unit Trust Company NAMAL Leverages Market Position with Backing from Union Bank

21st April 2011, www.island.lk

Union Bank’s strategic acquisition of a 51% stake of NAMAL will enable Sri Lanka’s first unit trust company to leverage its well established market position with the strength and backing of one of Sri Lanka’s fastest growing Banks.

NAMAL is forging ahead with a new strategic direction backed with the expertise of a new Board of Directors supported by well established product lines, a strong brand image and a customer base that will take the company to new heights says Avancka Herat, the newly appointed Executive Director of NAMAL.

He further stated that "as part of the new strategic direction and business strategy, the company is considering branding as an integral element and recently unveiled a new corporate identity that projects the transformation of NAMAL as a much stronger and dynamic player, whilst communicating the brand premise of value creation for investments to its preferred target audiences. The current shareholders of NAMAL are Union Bank, DFCC Bank and Ennid Capital.

NAMAL declared the 19th annual dividend for its flagship National Equity Fund (NEF), of Rs 2.50 per unit on the 30th March 2011 to all its unit holders.

S. Jeyavarman, CEO of NAMAL highlighted that NEF pays out annual dividend in the month of March every year, has done so continuously from its inception in 1992, 19 years ago. This dividend of Rs. 2.50 per unit translates to a 25% tax free dividend for investors who entered the fund at Rs 10/-. In the relevant dividend year ended 28th February 2011, the unit buying price increased from Rs 22.13 to Rs.30.63 a highlighted 38.4% increase, he said.

NEF being the balanced fund invests in both equity and debt markets and the Fund has the added advantage of being able to change its asset allocation to best suit the movements of the respective market, thereby adding value to the investor in the fund while enhancing the overall risk adjusted return to the long term investors. The current dividend mainly comprised gains and income from equity investments and income generated from fixed income instruments.

The good news to the investors in the fund is that the funds’ share portfolio has grown in the medium term in line with the objectives of the fund.

The National Equity Fund (NEF) was the first unit trust fund established in Sri Lanka, by National Asset Management Ltd (NAMAL) the company that pioneered Unit Trusts in Sri Lanka. NAMAL has seven unit trust funds under its management, which cater to diverse investor risk/return profiles.

NAMAL in the recent years launched NAMAL Amana Equity Fund and NAMAL Gilt Edged Fund 1 and NAMAL Acuity Value Fund, under close ended categories of funds. The units of the NAMAL Acuity Value Fund are listed on the Colombo Stock Exchange. "Our objective is to provide investors with a choice of the investment opportunities to choose appropriate funds for their long term investment needs and to plan specific financial needs" stated Jeyavarman.

Related Info :

• Union Bank Plans a Country Fund through NAMAL. Possibility of Listing is Singapore Explored

• NAMAL Acuity Value Fund Listed on the CSE, Sri Lanka

• Sri Lanka Unit Trusts Manage Rs22bn in Assets. Public Awareness a Must for Participation in the Economic Growth

'LinkConnector Validation'

Sri Lanka Unit Trusts Manage Rs22bn in Assets. Public Awareness a Must for Participation in the Economic Growth

20th March 2011, www.sundaytimes.lk,

Total assets under management in Sri Lanka's unit trusts, both open ended and close ended funds, encompass Rs. 22 billion; according to S. Jeyavarman, the President of the Unit Trust Association of Sri Lanka and the Chief Executive of National Asset Management.

Unit trusts are collective investments in a diversified portfolio of financial instruments, including shares, etc., similar to mutual funds, but where investors buy units in the trust. However, these are not as actively managed as mutual fund where fund managers buy shares, etc. Instead, the unit fund is more a trust with a set of existing assets, where units are bought and sold at prevailing market prices.

He further adds, in a statement to the Business Times, that these benefit the economy and the country because of their use "in capital market thus facilitating long term finance to corporate sector in the form of equity and fixed income capital". And that "it is important to note that the peoples’ savings are invested in long term assets vis a vis shares and create prospects for long term growth of capital.

By creating retirement savings through prudent investments for retirement, the dependency on the state welfare budgets could be reduced while making people to save for retirement from early stages of their career."

Mr. Jeyavarman also opines that unit trusts should grow in "awareness among the common man so that all households in Sri Lanka should participate in the growth of the economy and the capital market."

He also suggests that the industry is "looking forward for liberalisation of exchange controls for foreign individual and institutional investors to invest through the fund industry."

Further, he identifes the need to provide "proper distribution channels for (people) to conveniently invest and withdraw as and when needed. The industry is looking forward to work with banking and the finance sector to partner and take the products through their net work of branches. It is also necessary to provide proper advice on investment choices that they can make.

We are working with the Securities and Exchange Commission of Sri Lanka to make better awareness in this year through many initiatives."

According to Mr. Jeyavarman, unit trusts are a better option for the public than treasury bills and other financial instruments mainly because of the expertise of the unit trust fund managers, who "pick the right kind of securities with appropriate maturities for the investor in a unit trust.

Alternatively, the investor himself can buy a particular security on his own initiatives. He needs to monitor treasury bill maturities and re-invest again and again in the long term.

Similarly, if it is a share investment, he needs to understand the valuation and risk associated with such investments. The common investors neither have the time nor the knowledge to invest in these instruments. The unit trust provides the solution to achieve the needs of the nvestor while overcoming such constrains."

Additionally, contrasting unit trusts with investing directly in the shares; Mr. Jeyavarman notes that a "unit trust invests in both shares and other fixed income securities and there are specialised funds available to invest in both markets.

The stock market is always volatile for many reasons. One has to understand those reasons and act accordingly to succeed in the share investment.

However, the interest rate is moving down at this time and as a result equity and fixed income combination can give a better prospective return to all type of investors while their risk of investments are monitored. Investors who have not invested in shares may invest conveniently in shares through the unit trusts to gain in the medium to long term."

Further elaborating, he reveals; "We believe the investor need to buy shares regularly as market timing is a difficult exercise. When the stock market is down it so happens a majority of share prices goes down together. The investors need to approach their investments by regular saving schemes in the funds thus avoiding wrong market timing."

Related Info :

• Union Bank Plans a Country Fund through NAMAL. Possibility of Listing is Singapore Explored

• Sri Lanka Unit Trusts Attract Rs1.5bn New Funds in First Ten Months of 2010

NAMAL Acuity Value Fund Listed on the CSE, Sri Lanka

10th October 2009, www.island.lk, By Devan Daniel

The Units of the NAMAL Acuity Value Fund (NAVF) has been listed from 12th October 2009 and classified under the Closed end Fund Sector at the Colombo Stock Exchange. "The NAVF is a collective investment scheme designed for investors seeking capital appreciation on their investment" A press release from National Asset Management Limited (NAMAL), the managers of the Fund stated.

In Sri Lanka, it is the first occasion that a unit of a fund is being listed on the Stock Exchange. The investors can acquire the units through the member firms of the Colombo Stock Exchange to become a unit holder of the Fund. The investors will have the benefit of lower trading costs when buying or selling the units compared to the prevailing trading cost associated with the shares listed on the Stock Exchange.

NAMAL being the pioneer licensed Unit Trust Manager with 18 years of investment management experience launched this Fund to the public to enable them to participate in the growth prospects of the equities listed on the Colombo Stock Exchange. The Fund retains the option to invest entirely in fixed income securities in order to preserve the invested capital and generate distributable income whilst reducing the risk to the Fund, the release further stated.

Related Info :

• NAMAL Acuity Value Fund Declares First Dividends