African Alliance Uganda Discontinues High Yield Equity Fund. A savings gap has been left in Uganda's capital markets following the closure of the High Yield Fund, a moderate risk collective investment scheme, by African Alliance Uganda. The Fund was used by the company to manage cash saved and invested by about 500 individuals and institutions in government and company bonds in the country.
According to Ms Mona Muguma, an Investments Manager at African Alliance, the High Yield Fund (HYF) has been temporarily "closed" because of the limited interest in the fund by investors. "It has nothing to do with fund performance but everything to do with client uptake and none feasibility," Ms Muguma told Daily Monitor in an interview yesterday.
Not making sense
From a feasibility point of view, she said, the uptake of the Fund was not making sense to the company. "We would rather focus on what the market has shown that they prefer," She said. Investors who have been affected by the closure of the HYF have been advised to either switch to other funds or wait until March 2011, to redeem their money from the fund. Investors cannot withdraw their money from the fund now because it is under audit.
Single licenced firm
African Alliance, which is the only firm licensed to operate collective savings schemes (Unit Trusts ) in Uganda also operates the Uganda Money Fund and Balanced Investments Fund, which are low and high risk funds, respectively.
Based on annual comparisons and trends since 2004, African Alliance has found out that most investors in the company's profile are either low or high risk. "You find that the middle ground is not really a favoured point. So in terms of numbers, a critical mass was not being generated on the middle ground so we didn't see any reason to keep it," she said.
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