Investors in Zambia's capital markets are celebrating the launch of a new Collective Investment Scheme called the Laurence Paul Unit Trust. This was announced today by Chisha Folotiya, Managing Director of the scheme’s management company, Laurence Paul Investment Services Limited.

Unit Trusts are a structured and formal way for various investors to pool their money together and have it collectively invested by skilled professional money managers in various securities.  These securities include Money Market Securities such as Government Bonds, Treasury Bills, etc, or such as Equities (shares) through the Stock Exchange. The investments are made in the best interest of the investors using sound research capabilities.

Collective Investment Schemes such as Unit Trusts in Zambia are authorised by the Securities and Exchange Commission, which is one of the three financial market regulators (others being Bank of Zambia (banks, building societies), and the Pensions and Insurance Authority (pensions and insurance companies, brokers and agents). In addition, Laurence Paul Investment Services Limited operates under a Dealer License granted by the SEC.

Commenting on the launch of the Unit Trust, Folotiya said “It’s a great achievement to have the Laurence Paul Unit Trust finally up and running. Zambians are starting to learn the difference between saving and investing.  Unit trusts have historically given much better returns than bank savings accounts. We look forward to being able to help people and companies invest in the Unit Trust as a way of preparing for future expenses as well as the unforeseen.”

Folotiya went on to add that the Unit Trust is an ideal investment vehicle for all types of investors. “Some investors are individual families who are preparing for their children’s future education expenses. The other type of investor would be a company that is preparing for bonuses and end of contract gratuities. We have some company funeral funds and employee savings groups that wish to get a better return before they have to make a withdrawal.”

“One of our main investment policies,” Folotiya said “is to achieve what is called ‘Asset Diversification’. This means that investments are made in many different securities within each Fund. So this gives the advantage of hedging against negative performance of any one investment or sector of investments.”

Folotiya added that Unit Trusts offer a very flexible form of investing. This is built in terms of both amounts and types of investment allowed as well as access to those investments. There are no restrictions on how much and how often investments can be made, so investments can be made periodically in regular amounts through a salary deduction scheme by a company.

“For some time now, the only deductions people have been seeing on their payslips has been for loans or advances. This will be a positive type of deduction in that it represents something they will have access to later,” Folotiya said. “In the long run, it’s much cheaper to save and invest now than to borrow and then have to pay back.”

He added, “We also allow lump sums to be invested into the Funds. So if an investor comes across some money that they do not want to spend right away, they can come along and deposit it. Many people who wish to take part in medium to long term savings often end up having to lock up their money for much longer than they wish to. They may also find that making a premature withdrawal means losing some or all the gains made so far. Our Unit Trusts are designed to allow investors to be able to access all or part of their funds in shorter times.”

Set up of the Unit Trust

Regarding how the Unit Trust is set up, Folotiya went on say, “As the name suggests, the Laurence Paul Unit Trust is set up under a Trust Deed. This means that the investments do not actually belong to the management company. Not only are the assets held in trust by independent Trustees, AMG Global, but their safe custody is provided by Barclays Bank, acting as independent Custodians.”

Thus, all investments are done with the knowledge and participation of the Trustees and Custodian through a system that includes regular reporting and full accountability. Laurence Paul Investment Services Limited acts as the Management Company of this Collective Investment Scheme and is responsible for administration and back office functions, as well as decisions about the actual investments of the funds. 

“When monies are received from Unit Holders, they are transferred to the custody of Barclays Securities division and we then issue instructions of what securities should be invested in as well as what should be done with proceeds from the investments,” Folotiya explained

Folotiya also gave details of the four Fund Portfolios that make up The Laurence Paul Unit Trust from which investors can choose from depending on their individual investment objectives.

“The Money Market Fund is designed for stability and safety. It is for those who wish to gain access to Government Bonds and Treasury Bills and similar money market securities,” he explained. “Then we have the Equity Fund, which invests in shares on the stock exchange and its higher returns. Of course, this might be seen as a higher risk tolerance, but as professional investors, our investment objective is to earn a higher rate of return than the average of the Zambian equity market, without greater risk of loss. That’s a fancy way of saying that we use professional techniques to analyse companies that we buy shares in.”  

“A brand new product on the market is the Balanced Fund, which gives access to both money market and equities,” he added. “In the past, Zambian investors had to choose between bonds and treasury Bills or the stock market. Now we offer them a bit of both at the same time.”
“For investors who want to seek returns outside of Zambia, the Laurence Paul Unit Trust also offers the Global Fund. This is denominated in US Dollars and makes investments in securities outside of Zambia. The Global Fund can be used as a hedge against any issues that might happen to our local markets. Remember, the key rule of investing is to diversify. We are in the process of choosing five foreign markets that we feel will give our investors a good return”

“Each Fund makes different types of investments according to its Investment Objectives, which are based on factors relating to security and risk. These objectives are given in the Offering Circular. Of course, Unit Holders can choose to invest their funds in more than one, or indeed even all the Fund Portfolios,” Folotiya

Laurence Paul will also soon start Stockbroking operations. “We hope to get the full go ahead from the Lusaka Stock Exchange any time now. It is our hope that Laurence Paul will be able to fully participate in the forthcoming ZANACO IPO as we work to empower Zambian investors and help develop the Capital markets,” Folotiya added.

Laurence Paul Investment Services Limited is a private company licensed to deal in securities under the Securities Act. It’s Managing Director, Chisha Folotiya, has been a leading and pioneering businessman in Zambia for the past fifteen years. The Company operates out of its office on 5th floor, Design House, in the heart of Lusaka.

Submitted by Laurence Paul Investment Services Limited, Zambia.