Managed funds reach $156bn

Nelson Gahadza-Senior Business Reporter

FUNDS under management (FUM) of investment managers reached $156 billion in 2020 from about $18 billion a year earlier largely driven by continued revaluation of real estate assets and general appreciation of equity based assets.

Investment managers fall under the supervision of the Securities and Exchange Commission of Zimbabwe (SecZim), and the commission in its 2020 annual report said industry average stood at $8,24 billion.

“The growth in FUM was driven by continued revaluation of property investments at prevailing interbank rates from US dollar denominated values as well as the general appreciation of the equity‑based assets,” Mr Tafadzwa Chinamo, the SecZim chief executive said.

He noted that the Old Mutual Investments Group (OMIG) continued to dominate the market commanding 50,53 percent of the total FUM.  

The report shows that during the year under review, 61,33 percent of  FUM  was  invested  in  quoted equities, followed by property and  unquoted equities which had 31,71 percent and 3,30 percent respectively.

Mr Chinamo said the industry average operating profit for the period under review amounted to $42, 42 million.

“Most of the securities investment management companies were profitable except Atria, Nyaradzo, and First Mutual Wealth Investment Managers who reported operating losses of $775,107, $3,556,335, and $5,423,138, respectively,” Mr Chinamo said.

He added that the industry’s average total operating costs to management fees ratio was 123,85 percent, an indication that the sector had improved in funding operations from core business, strained by rising costs of doing business due to the inflationary environment.

According to Mr Chinamo, as at December 2020, the sector’s capital position was satisfactory.

“Of the nineteen (19) asset managers, two (2) asset managers were not adequately capitalised during the period as their adjusted liquid capital could not cover the total capital requirements,” he said.

The industry average capital adequacy ratio was 1.54x.

Mr Chinamo said all asset management firms, except for Atria, Nyaradzo and TN Asset Management had current ratios above 1,0 as at December 31, 2020.

“An outlier of 285,89 in current ratio was recorded in Equivest while TN had the lowest ratio of 0,63x. 

“The industry’s current ratio averaged 20,69x,” Mr Chinamo noted.

He indicated that the industry was able to fully fund its financial obligations by utilising assets. The industry averaged net assets of $52,385,625 and net asset cover ratio of 20,79.