Outlook for the Asset Management Industry Markets Update – Ghana – Nimed Capital Limited
THOUGHT OF THE WEEK:
Outlook for the Asset Management Industry
The asset management industry is growing with new business lines evolving on a continuous basis. The industry’s Funds under Management has increased by CAGR of 50% on an annual basis. Emerging trends indicate that Asset Management firms with Collective Investment Scheme Products, such as Mutual Funds, Unit Trust and Real Investment funds are competitively advantaged to scale-up the AUM and improve their bottom line significantly in the years ahead.
The emerging developments below make collective investment schemes or products the new business line to pursue.
- Increase in Pension Allocations to Mutual Funds: The increase in pension funds allocation target- into collective investment schemes- from a maximum of 5% to 15% will increase growth of such products astronomically. Due to this all the big players in the asset management industry have set-up mutual funds to absorb pension funds. EDC and Stanlib have CIS products that currently contributes to about GHS 500 Million and GHC 300 Millions to their assets under management.
- New Solvency Framework Guideline for Insurance Companies: The new available capital resources (ACR) calculation for insurance companies opens room for them to invest heavily in money market mutual funds to allow for a low discount rate 5% on the allocated asset. This is the lowest in the entire permissible asset class for insurer’s, except Government Bonds, which attracts no discount. This development opens doors for millions of funds to flow into Money Market Funds.
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