An aggressive marketing plan to promote Unit Trusts among the Sri Lankan community is to be devised by the Securities and Exchange Commission of Sri Lanka (SEC), a top official of the SEC said.
The aim is to venture more into the rural areas widening the investor base, Malik Cader, Director General of SEC told the Business Times this week, on the sidelines of a seminar on the Central Bank roadmap.
He said the SEC is also planning to introduce Internet share trading and gold trading at the Colombo stock market shortly. The Unit Trust industry, a vital segment of the capital market of Sri Lanka is the best conduit to mobilise savings of the less sophisticated small investors. Therefore, the SEC encourages small scale investors to start their investment through Unit trust as it is less risky than investing in the market directly.
Mr Cader urged commercial banks to enter into Unit Trust trading as a facilitator of the stockmarket. A Unit Trust can provide a way to invest in the stockmarket which is lower cost and lower risk than direct investment in the stockmarket. Unit trusts pool funds from a large number of investors and then spread this across a range of stock market investments, he added. Currently, the SEC has licensed five management companies to operate 13 open-ended Funds.
The industry in Sri Lanka is yet to reach its full potential compared to other regional developed markets where a majority of retail investments are channeled to the capital market through unit trusts, mutual funds and exchange traded funds, he said. The Unit Trust is designed for less sophisticated investors to participate in the growth of the different sector and to diversify their investments, he added. The Unit Trust industry has remained largely static at around 23,000 unit holders although the Net Asset Value has grown to around Rs.12.5 billion last year.