In an era where savvy investors are looking to optimise their portfolios, unit trusts have emerged as a compelling choice. These investment vehicles not only provide cost-effective access to the bustling fixed income and stock markets but have also gained traction in Uganda’s financial landscape.
Among these, the UAP Umbrella Trust Fund stands out as a powerful asset, helping investors outpace inflation while ensuring security and convenience. Imagine investing borrowed money for essential expenses, such as school fees. If navigated wisely-where the loan interest rate is lower than the returns from your chosen fund and the investor exercises discipline, the outcome can be positive.
This article dives into the world of unit trusts, offering a vital guide for families and savvy savers in Uganda, where traditional banking solutions often fall short and astute investing can lead to both financial growth and peace of mind.
Unit trusts are gaining traction as a practical means of wealth accumulation in Uganda, particularly for short-term objectives such as education financing. They offer yields that outperform standard bank interest rates and are subject to regulatory oversight. They are also designed with beginners in mind.
As the financial landscape transforms, unit trusts stand as a beacon of oversight and quick investment access.
According to Isaac Simbwa, a global markets dealer, institutional banking, corporate and investment banking at Absa Bank, the allure of unit trusts lies in their ability to diversify risk while tapping into the expertise of professional fund managers.
‘Unit trusts pool resources from multiple investors with a shared goal, building a portfolio of diverse financial instruments, ranging from equities to bonds and cash deposits,’ he explains.
For those weighing unit trust options, Absa features three distinct offerings: the UAP Money Market Fund, the UAP Balanced Fund, and the UAP Umbrella Trust Fund. Each fund is crafted to meet different investment goals, underscoring the importance of aligning choices with personal financial objectives.
When diving deep into unit trusts, consider your investment timeline: Are your goals short-term or long-term? The balance between immediate liquidity, prospective returns, and risk tolerance is crucial.
‘If you aim to save for a child’s upcoming school fees within three months, unit trusts or treasury bills could be the right fit, ensuring your capital remains safeguarded while earning reliable interest.
Meanwhile, for those eyeing long-term wealth accumulation, the bond market may provide more enticing returns-outpacing unit trusts by 300 to 400 basis points over five years,’ he adds.
Evaluating diverse asset classes is imperative. An investor may notice subtle differences in returns-while one asset class yields 12 percent, another might shine at 12.5 percent or 12.1 percent.
Right investment
Simbwa emphasizes that selecting the right investment goes beyond mere interest rates. It is about aligning with one’s risk appetite and investment ambitions.
For those focused on cash management, utilising a unit trust can be a strategic way to build capital over a year.
Simbwa adds: ‘For wealth seekers, diving into the bond market may unlock higher yields and leverage the compounding interest effect and the liquidity that numerous banks offer, allowing cash-out in mere hours-is a considerable advantage in urgent situations.’
The decision rests on understanding your investment goals. Pose the right questions: ‘Are you preparing for immediate expenses, or are you cultivating a nest egg for the future?’ he asks.
Different investment vehicles resonate with unique individuals based on their financial aspirations.
No one size fits all
In the realm of Collective Investment Schemes (CIS), no one-size-fits-all solution exists, Simbwa notes.
‘In the vast ocean of investment opportunities, no single unit trust or asset class dominates. Each investment vehicle is tailored with specific objectives in mind, addressing a variety of risk profiles and investment horizons. For example, a parent budgeting for educational costs may opt for a three-year bond, where a long-term investor might favour a 20-year bond to enrich capital growth,’ he explains.
As you navigate your investment journey, keep sight of the ambitions that drive your choices.
‘By aligning these aspirations with the available asset options, you will be better positioned to pinpoint which unit trust aligns most closely with your financial goals,’ he elaborates.
Mr Sanjay Rughani, chief executive officer of Standard Chartered Bank, emphasizes that when considering returns, it is important to assess not only the financial aspect but also your comfort level with the associated risk.
He notes that the Standard Chartered product called Shillingi offers an attractive rate, which currently stands at 12.5 percent.
‘This rate applies when you lock in your funds; even if you invest for just three days, you will receive returns based on the duration your money is held,’ Sanjay notes.
Mr Richard Patrick Byarugaba, board chair of Old Mutual Investment Group (OMIG), highlights that unit trusts are becoming increasingly popular as they can serve both as a consistent source of daily earnings and as a means of building long-term passive income.
As a financial services strategist and personal transformation coach, Byarugaba emphasizes the potential of unit trusts to transform investment strategies in Uganda.
He recognises the untapped potential of collective investments and collective savings, noting that the fastest-growing sector in Uganda is indeed in this area.
Byarugaba pointed out the prevalence of savings societies in towns across Uganda, indicating a strong local commitment to collective saving initiatives.
Growth of unit trusts
During Old Mutual Investment Group Uganda’s 2025 annual general meeting, Mr Zac Kisesi, managing director of Old Mutual Investment Group Uganda, shared impressive growth figures for their unit trusts.
Just a year prior, total investments in Old Mutual’s unit trust products stood at approximately Shs2.1 trillion. This has risen to around Shs2.8 trillion.
In terms of dollar-denominated unit trusts, they have increased from about $24 million to $47 million, largely due to enhanced customer experience and the dedication of their investment advisors.
This growth reflects a significant advancement in financial inclusion in Uganda, with a remarkable 67 percent increase in total unit holders-from 30,165 to 50,416,’ he notes.
Kisesi expressed pride in the fact that more than 20,000 new investors joined Old Mutual’s unit trusts in just one year, underscoring the growing awareness and accessibility of investment solutions available to Ugandans.
The financial results were equally encouraging. OMIG’s chief financial officer, Mr John Golooba, reported a 43 percent increase in total assets under management, amounting to Shs2.407 trillion.
Each of their funds performed admirably, with the Umbrella Fund yielding 11.77 percent, the Money Market Fund returning 11.28 percent, and the Balanced Fund achieving a return of 12.64 percent, all surpassing their respective benchmarks.
Notably, the Dollar Fund more than tripled in value to $39.22 million, with a net return of 5.03 percent, credited to a strategic reallocation towards fixed income and longer-dated government bonds.
Given the current economic climate, characterised by rising interest rates driven by the government’s domestic financing needs, OMIG recalibrated its portfolios to focus on higher-yielding long-term bonds. For instance, bond exposure in the Umbrella Fund grew significantly, and the allocation to tenors above 10 years rose to 47.4 percent.
Comparing returns of unit trusts vs traditional methods
In contrast to traditional savings methods, such as those offered by the National Social Security Fund (NSSF), which recently announced the successful growth of its voluntary savings scheme, unit trusts appear to offer more attractive returns.
NSSF has seen 32,000 members contributing Shs21 billion in just seven months through its Smart Life Flexi portfolio, which attracts micro-savers from the informal sector.
While NSSF reports a focus on accessibility and cutting administrative costs through digitisation to attract savers, the tangible returns seen in unit trusts-especially with their performance over the past year-suggest that for those seeking better investment outcomes, unit trusts could be a more favourable option.
Mr Patrick Ayota, NSSF’s managing director, acknowledges the rapid uptake of their voluntary savings scheme and the positive shift in saving behaviours among Uganda’s population.
However, the growth and performance of unit trusts indicate that they may be the smarter choice for investment, especially for those looking to maximise returns and grow wealth over time.
While both unit trusts and traditional savings methods play essential roles in personal finance, for those aiming for higher returns, investing in unit trusts with a reputable firm might present a more lucrative opportunity.