Uganda’s Old Mutual unit trusts swell to $910m as investors chase yields

KAMPALA, UGANDA – Assets managed by Old Mutual Investment Group’s (OMIG) unit trust funds in Uganda surged 40 percent last year to 3.36 trillion Ugandan shillings ($910m), as savers piled into government-backed investment products offering double-digit returns in one of East Africa’s higher-yielding fixed-income markets.

The figures, announced at the company’s ninth annual general meeting in the capital, Kampala, underline a broader shift under way in Uganda, where elevated interest rates and a growing appetite for formal savings vehicles have drawn tens of thousands of new investors into collective investment schemes over the past two years.

Old Mutual’s Chief Financial Officer, John Golooba, told unit holders the growth, from 2.41 trillion shillings ($653m) the previous year, was driven by “strong net inflows, supported by rising investor participation and the compounding effect of income earned across portfolios”.

The bulk of that growth came from the firm’s flagship Umbrella Trust Fund, which expanded 39 percent to 3.31 trillion shillings ($896m) and returned 12.56 percent to investors – a yield few traditional bank savings accounts in the country can match. Nearly 80 percent of the fund’s assets are held in Ugandan government securities, reflecting both the depth of the country’s domestic debt market and fund managers’ preference for safety over riskier assets like equities, which remain a small share of most local portfolios.

Smaller, more conservative products saw even sharper growth. The Money Market Fund, often used by savers seeking short-term, low-risk returns, expanded by 281 percent to 38.99 billion shillings ($10.6m), while a Balanced Fund mixing equities and fixed income grew 80 percent to 9.66 billion shillings ($2.6m), posting the highest return among the local funds at 13.62 percent.

A dollar-denominated fund, popular with Ugandans seeking to shield savings from currency depreciation, grew 61 percent to $64.31m and returned 5.15 percent, a more modest yield reflecting global dollar rates and the fund’s emphasis on liquidity over riskier offshore assets.

Old Mutual’s Managing Director, Zaccheus Kisesi, attributed the inflows partly to growing financial literacy and the rise of informal savings circles and investment clubs that have proliferated in Uganda in recent years, alongside greater trust in regulated financial institutions.

“Many Ugandans have lost money in the past to so many unscrupulous investment schemes, but the beauty about the regulator is that they have given credibility to people to entrust their pension money and their hard-earned savings,” Kisesi said, crediting Uganda’s Capital Markets Authority with helping rebuild confidence in the sector after a string of fraudulent schemes targeted savers in past years.

The company also used the meeting to announce a push into new product lines. It has launched a mobile app allowing clients to open and manage investment accounts remotely, integrated its platform with several commercial banks – including Stanbic, Equity and Centenary – to ease transfers into unit trust accounts, and begun bundling life assurance cover with some investment products.

Old Mutual said it had also secured an Alternative Investments Fund Management licence from regulators, a move that would allow it to launch products beyond traditional stocks and bonds as competition intensifies among fund managers operating in Uganda’s still-nascent capital markets.

The firm’s accounts were audited by Deloitte & Touche, which issued an unqualified opinion, and were approved by the board in March.

Looking to 2026, Old Mutual forecast Uganda’s economy would grow by about 6.5 percent, helped by the start of long-delayed commercial oil production expected later in the year. But it warned that a widening government budget deficit, linked in part to election-related spending, could keep borrowing costs – and bond yields – elevated in the months ahead.