The Unit Trust Association (UTA) of Sri Lanka is aiming towards attracting small investors by steering them away from more traditional investment options. A recent market study found that the public had little understanding of unit trusts which provide an alternate method of investing to meet people's financial needs through investments in high yielding securities such as stocks, treasury and corporate securities and trust certificates while managing risk through adequate diversification.
At a media briefing last week following the UTA's Annual General Meeting, President of the UTA, S. Jeyawarman said different investment schemes are available for investors with divergent risk appetites.
The UTA, consisting of five member-companies representing fund management companies, is regulated by the Securities and Exchange Commission (SEC) and collects funds in a licensed trust which is kept with the custodian bank. The trustee bank ensures that the management company does not invest in areas that are not specified in the agreement with clients.
Concerned by the recent savings scandals in the Sri Lankan financial market, the UTA noted that it is not appropriate to offer extremely high returns to investors without educating them on the high risks associated with such high returns. Investors should seek proper advice on risk-return balance when investing their money. Furthermore, the Unit Trust Management Companies are obliged to guide investors in the right choice of investments to meet their objectives.
Director of the Postgraduate Institute of Management (PIM) Dr. Uditha Liyanage spoke at the media briefing on the lack of public awareness of unit trusts and the need for the UTA to increase its visibility and educate the public on the benefits of investing with them. Dr. Liyanage said that according to data from an AC Nielsen survey, people stated that the most important factors when it came to investing was playing it safe and not losing the capital they invested. People are also looking for high returns and saving for the long term. He added there is a drive towards consumption and that a 'consumerist' ideology is spreading around the country, making the traditional modes of savings inadequate. Inflation is also making the real value of money depreciate.
The savings market is valued at Rs. 500 billion, the fixed deposit market is valued at Rs.550 billion while the unit trust market stands at Rs.7 billion.
The UTA is an apex body of the Unit Trust Fund Management companies. The executive committee of the Association is represented by senior officers from CT Fund Management (Pvt) Ltd, Ceylon Asset Management Company Ltd, Eagle NDB Fund Management Company Ltd, National Asset Management Ltd and the Unit Trust Management Company (Pvt) Ltd. (NG) |
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