Fund manager, Ndovu, has unveiled a collective investment product that will help medium to long-term investors create wealth over time through diversified exposure across different asset classes.
With minimum amount to begin with currently set at Sh250,000 for the Kenya Shilling Fund and an option of topping up with Sh100,000, Ndovu joins other Capital Markets Authority approved special fund firms like the Mansa-X Special Fund, OAK Special Fund, and Britam Special Fixed Income Fund, which often offer higher returns through multi-asset strategies as well as fixed-income securities.
The company’s chief executive and co-founder Radhika Bhachu narrated how the new special investment vehicle, christened “Kibaba Fund”, will enable at least 200,0000 investors draw up a plan solely for wealth accumulation while meeting their investment demands in an era where business environment is marred with volatility, uncertainty and increasing complexity.
“We have been doing this for four years now and customers are really excited,” Bhachu said. “We are delivering returns of about 20 percent on the dollar… We are not doing anything crazy but simply selecting asset classes, sectors that we believe in, asset classes that we think will do well. And, I believe in every product that we offer. If I can’t invest in it, then we can’t give it to customers.”
This special fund comes at a time when investment experts still debate why many people think they know more about growing wealth just because they can, for example, invest in highly lucrative industries like real estate. The big question is, sure, you can invest in real estate, but can you stay diversified and invested?
Ms Bhachu says “land” investments often fail to deliver high returns due to low liquidity, high holding costs such as taxes, and legal fees, and choice of location, where fully developed areas tend to stop appreciating in value. While considered a safe asset class, land lacks the income generation of stocks and is highly sensitive to zoning changes, pollution, or poor demand in remote areas.
“Very interestingly, historically we’ve been told to go and buy land, go buy real estate when we’ve seen land is illiquid. That’s not wealth creation, that’s wealth erosion. So we have to move away from the thinking that the only way to create wealth is through buying land,” she said.
Victor Marangu, founder and CEO of WealthPro Africa also warns of this assumption that everyone will magically become wealthy through traditional investment vehicles. Investments in a diversified portfolio covering equities, fixed income, REITs, ETFs, and commodities can growth wealth. Investors also need to regularly adjust their portfolio mix while ensuring that their cash is always where it performs best.
“One thing to remember, markets haven’t been doing very well over the last five years, and the truth is markets go through recessions, and so the important thing is to choose a partner that understands that recession happens so they can position your portfolio in away that when the recession happens you are prepared, and that’s the value that we are offering,” says Marangu.
