Mutual funds not attracting investors

The Managing Director of EDC Investments Limited, Mr Kisseih Antonio, has said the low patronage of mutual funds in the country presents a huge opportunity for investment companies to exploit. 

According to him, mutual funds attract few investors due to a number of factors, but that notwithstanding, the situation points out that there is an opportunity that has gone unexploited.

There is, therefore, the need, for investment companies to devise ways of reaching out to people who are yet to invest in  these funds. 

“Currently, there are 43 mutual funds and unit trusts in Ghana. However, the subscriptions to these schemes remain very low. Certainly, a number of factors are responsible for this, some structural and others informational in nature. However, this situation is a pointer to the tremendous opportunity that has gone unexploited,” he said at the launch of the EDC Money Market Fund in Accra. 

Mutual funds, which are professionally managed collective investment schemes that pools funds from investors to create a larger fund which is invested on their behalf, are said to have attracted few investors because of poor savings culture, high fees and commissions as well as difficulty in fund valuation. 

Low savings culture

Mr Antonio explained that statistics from the Bank of Ghana (BoG) showed that the level of national savings is about 17 per cent of the country’s Gross Domestic Product (GDP) far below approximately 30 per cent of emerging East Asian economies like Malaysia. 

“This implies that the culture of savings is not something which is well embedded in our economy both at a micro and macro level. I believe that we all appreciate, even from a household level, that there will never be a time when there is enough surplus income to be set aside for savings,” he explained. 

He said the propensity to consume was a natural human habit that dates back to medieval times and explained that “saving like all good habits is a discipline to be learnt through consistent exercise rather than an outcome of our surplus income.” 

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EDC Money Market Fund

EDC Investments Limited has launched its Money Market Fund, with an initial Public Offering (IPO) of GHC1 per unit, from June 27 to July 18, 2016.

The open-ended investment option is available for subscription by both individuals and institutional investors and seeks to maximise income in line with prevailing Ghanaian money market rates, while aiming to preserve capital and to maintain a high degree of liquidity.

Mr Antonia said the EDC Money Market Fund would invest in a wide range of diversified portfolio of short-term, high quality money market securities. 

“A unique feature of the fund is the distribution of net income on investments to unit holders who would then have the option to elect to be paid immediately or reinvest their distribution in new units,” he said.

The fund is available for subscription by both individual investors for a minimum initial amount of GHc100 and for institutional subscribers for GHC50,000.

The fund offers flexibility to investors as there is no requirement to commit funds for any period and there are no penalties for redemption. The fund will be managed with very high levels of liquidity in order to meet investors’ 24-hour redemption requirement.