Unit trust industry continues to attract more funds; industry assets top Rs.200bn

Sri Lanka’s unit trust industry, which began to attract funds in large numbers with the fall in market interest rates, continued to add assets during April, which helped the industry to surpass Rs.200 billion in assets under management (AUM).  

The five largest funds added Rs.6.7 billion in fresh assets in April, reversing the Rs.2.1 billion decline seen in March, reflecting that the industry’s sharp ascent seen since last year isn’t not yet over.

The industry, which had assets worth Rs.113.8 billion at the beginning of 2020, saw its assets soaring to Rs.190.5 billion by the end of 2020 and further above Rs.200 billion by the March end, making the sector as one of the biggest winners of the low interest rates in the economy.

This marked nearly 70 percent increase in the AUMs within a single calendar year and more than 100 percent increase in the AUMs from the year from April 2020 through March 2021, the highest in its history and the most compared to any other asset class during the same period. 

With this faster growth in assets, the sector improved its size by way of improving its share in the total financial system from 0.6 percent in 2019 to 0.8 percent in 2020.

The top five unit trust funds, NDB Wealth Money Plus Fund, CAL Investment Grade Fund, JB Vantage Money Market Fund, First Capital Money Market Fund and CAL Income Fund together added Rs.18.1 billion in fresh assets into the sector during the first four months. 

As interest rates have fallen to their historical lowest, individuals and firms seeking slightly higher reruns are being drawn to unit trust funds, which can offer somewhat higher return than what a bank fixed deposit could offer as the fund operates a portfolio of assets. 

Meanwhile, corporates, which account for more than 80 percent of the AUM in the industry, use unit trusts as a popular way to park their excess liquidity as part of their working capital.