18 Apr 2023
Mutual funds are investment vehicles that pool money from multiple investors and use it to purchase a diversified portfolio of securities or other assets. UTT is an example of Mutual Funds in Tanzania.
UTT stands for Unit Trust of Tanzania, which is a collective investment scheme that pools money from individual investors to invest in a diversified portfolio of assets.
UTT invests in various asset classes, including equities, fixed income securities, and money market instruments. The allocation to each asset class depends on the fund's investment objective and risk profile. For example, UTT's equity funds invest mainly in stocks of companies listed on the DSE, while its fixed income funds invest in bonds issued by the Tanzanian government or companies listed on the DSE. This means that the fund managers make investment decisions based on market trends and economic conditions, and actively buy and sell assets within the mutual funds to optimize returns and minimize risks.
UTT also employs a bottom-up approach to security selection, which means that the fund managers carefully evaluate individual securities based on their financial performance, management quality, and other factors to identify investment opportunities that will perform well in the long run.
The returns of UTT's funds can vary depending on the performance of the underlying assets held by each fund. Here are some historical returns of UTT's funds, as reported on their website:
Money Market Fund: The Money Market Fund has consistently generated competitive returns relative to other money market instruments in Tanzania. As of December 2021, the fund had a net asset value of TZS 121.6 billion and a 1-year return of 5.09%.
Equity Fund: The Equity Fund has generated attractive returns over the long term, reflecting the growth potential of Tanzania's equity market. As of December 2021, the fund had a net asset value of TZS 114.6 billion and a 1-year return of 29.04%.
Balanced Fund: The Balanced Fund seeks to provide investors with a balance between income and growth by investing in both equities and fixed income instruments. As of December 2021, the fund had a net asset value of TZS 28.9 billion and a 1-year return of 16.11%.
Fixed Income Fund: The Fixed Income Fund is designed for investors seeking stable returns from fixed income investments. As of December 2021, the fund had a net asset value of TZS 63.6 billion and a 1-year return of 8.67%.
Bond Fund: The Bond Fund invests in a diversified portfolio of corporate bonds and Treasury bonds. As of December 2021, the fund had a net asset value of TZS 10.8 billion and a 1-year return of 12.39%.
Shariah Fund: The Shariah Fund invests in a diversified portfolio of Shariah-compliant equities listed on the Dar es Salaam Stock Exchange. As of December 2021, the fund had a net asset value of TZS 9.9 billion and a 1-year return of 25.14%.
Investors can choose the UTT product that best suits their investment goals, risk tolerance, and investment horizon. The investment objective, asset allocation, and investment strategy of each fund are disclosed in the fund's prospectus, which investors should review carefully before investing.
Also, It's important to note that past performance is not a guarantee of future results, and investors should carefully consider the risks and potential rewards of each fund before making any investment decisions.
In summary, UTT's investment style aims to generate competitive returns for investors while minimizing risks through diversification and active management.
"Disclaimer: This is not financial advice. It is intended for informative purposes only
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