chapter fiv mpya1.doc
Post on 04-Apr-2018
214 Views
Preview:
TRANSCRIPT
-
7/29/2019 CHAPTER FIV MPYA1.doc
1/12
CHAPTER FIVE
FINDING AND ANALYSIS:
5.0 INTRODUCTION:
This chapter discusses the findings and analysis the study. The study aimed at
collecting data from the investors and potential investors of Umoja unit trust fund as well
as the management of Unit Trust of Tanzania on their various opinions on the relevance
collective investment scheme in Tanzania. The objectives of the study were as follows;
1. To examine the linkages between collective investment scheme and saving
culture in financial assets among Tanzanian citizens
2. To examine how the Umoja Unit Fund has achieved to diversify the portfolio and
whether the diversified portfolio brings capital growth and wellbeing to investors.
3. To examine whether the compulsory minimum number of unit set (50 unit at
Tshs 100/-) are affordable to majority of Tanzanian:
5.1Description of individuals who responded
There were 55 respondents in this study.54 respondents were investors and potential
investors of Umoja Fund. One respondent was the head of investment management of the
Unit Trust of Tanzania (UTT). Of the 54 respondents, 28 (51.9%) were male and 26
respondents (48.1) were female
GenderITEM FREQUENCY PERCENT
Male 28 51.9%
Female 26 48.1%
Total 54 100%
-
7/29/2019 CHAPTER FIV MPYA1.doc
2/12
Over 78% of the respondents had a saving size of more than Tanzanian shillings 1000,
000/- per year while the remaining 22% respondents had saving of less than Tanzanian
shillings 1000, 000/- per annum. The table below summarizes the size of household
savings.
Savings at household level
ITEM FREQUENCY PERCENT
Income less than Tshs 100,000/- 2 3.9%
Between Tshs 100,000/- and 500,000/- 6 11.8%
Between Tshs 500,000/- and 1000,000/- 3 5.9%
Over Tshs 1000,0000/- 40 78.4%
Total 51 100%
As at 31st July 2006; the Umoja Fund had the net asset value of Tanzanian shillings
114,476,096,812/-(1$=Tshs 1,287/-)mostly owned by Tanzanian citizens.The board of trustee of Unit Trust of Tanzania (UTT) declared income distribution to unit
holders amounting to Tanzanian shillings 9/-(9%) per unit which will be paid on15
September 2006.
Umoja Fund is a balanced fund with 70% in debt and 30% in equity.Of the
portfolio 46% is parked in instruments of less than one year maturity and 54% of the
portfolio is parked in longer term assets. Also due care has been taken to minimize risk
while constructing the portfolio. As a result 53% of the assets have been parked in risk
free assets like treasury bills and treasury bonds and the rest in equities (30%) and bank
deposits (17%). The fund investment decision is undertaken by the investment team
which is made up of in-house staff. The team is responsible for recommendations to the
-
7/29/2019 CHAPTER FIV MPYA1.doc
3/12
Chief Executive Officer. The table below gives a summary of the portfolio of the Unit
Trust of Tanzania
Item Percent
Debt 70%
Equity 30%
Instrument of less than 1 year 46%
Long term asset 54%
Risk free assets 53%
Equity 30%
Bank deposit 17%
To achieve the above objectives the following questions were answered by respondents
as follows:-
5.1.0In your opinion, do you think that the existence of Umoja Fund stimulates the
saving culture in the society?
46 individuals who responded (86.6%) agreed that the existence of Umoja Fund
stimulates the saving culture among Tanzanians citizens while 7 individuals ( 13.2%)
disagreed..
Umoja stimulates savings
Item Frequency Percent
Yes 46 86.8%
No 6 13.2%
Total 52 100%
-
7/29/2019 CHAPTER FIV MPYA1.doc
4/12
Similarly,both female and male respondents agreed that the existence of Umoja Fund
stimulates the saving culture as the table below shows:-
Gender TotalMale Female
umoja
stimulatessavings
yes
22 24 46
no 4 2 6
Total26 26 52
The above table indicates that most of the respondents agree that the Umoja Fundstimulates saving culture to Tanzanian citizens. In addition, the respondents with 30-39
age category seem to have more saving than other age categories the table below
shows:-
Savings at household level
Totalless than1000000
between
100000 and500000
between5
00000and
1000,0000
over1000000
Age 20 - 29 0 3 0 4 7
30 - 39 1 2 2 21 2640 - 49 1 0 1 14 16
50 and
above0 1 0 1 2
Total 2 6 3 40 51
5.1.0 Do you expect to sell off your interest after the lock in period ends on
30/07/2006?
-
7/29/2019 CHAPTER FIV MPYA1.doc
5/12
When responding to this question 17 respondents (36.2%) were of the opinion that
they would sell off their units when the lock in period ends on 31/07/2006.30 respondents
(63.6%) disagreed to sell their units after the lock in period.
5.1.1 What reasons have prompted you to choose the Umoja Fund rather than other
types of investments?
Respondents gave different views to as to why they choose to invest in Umoja Fund
such as to beat bank interest, spreading the financial risk, advice of professional financial
adviser and buy and sell units to make money. The following are the results given by
respondents:-
5 respondents (10.9%) gave the reason for them to invest in Umoja Fund as to beat bank
interest rates, 5 respondents (10.9%) invested in the fund simply because they saw their
colleagues buying the units.15 respondents (32.6%) invested in the fund for the sake of
spreading the risk, 7 respondents (15.2%) invested in the fund in order to get professional
advise while 14 respondents (30.4%) invest in the fund in order to buy and sell units for
profit. The table below gives a summary:-
Frequency Percent
Beat bank interest 5 10.9%
Friends buying units 5 10.9%
Spreading financial risk 15 32.6%
Professional advisor 7 15.2%
Buy and sale units 14 30.4%
-
7/29/2019 CHAPTER FIV MPYA1.doc
6/12
This shows that the majority of investors in Umoja Fund invest for two main reasons.
One reason which motivates them to invest is to spread their financial risk. The second
motive is to make profit out of buying and selling units.
5.1.2 What do you believe is your level of understanding of your investment in the
fund?
With respect to level of understanding the Umoja Funds operation, respondents gave
different views as follows:-
10 respondents(18.5%) urged that they have very good knowledge about the way the
Umoja Fund operates.23 respondents (42.6%) said that their knowledge about the fund is
fairly good, whereas 14 respondents(25.9%) and 7 respondents(13%) said that their
knowledge about the fund is fair and poor respectively.Generally,over 60% of the
respondents know how the fund operates. The pie table below gives a summary about the
level of understanding.
Level of understanding Umoja Fund
Frequency Percent
very good 10 18.5
good23 42.6
fair14 25.9
poor 7 13.0
-
7/29/2019 CHAPTER FIV MPYA1.doc
7/12
Total 54 100.0
5.1.3In your opinion, do you think the majority of Tanzanian citizens can afford to
buy the unit at the current set price?
Out of 52 respondents, 32respondents (59.3%) had the opinion that the majority of
Tanzanians can afford to buy the units at the current set price of Tanzanian shillings
100/= per unit while the remaining 20 respondents (38.5%) urged that the current price is
not affordable to majority of Tanzanians.
-
7/29/2019 CHAPTER FIV MPYA1.doc
8/12
noyes
majority afford to buy units?
40
30
20
10
0
Frequency
majority afford to buy units?
The above chart shows that the majority of Tanzanian citizens can afford to buy the units
at the current set price.
5.1.4 Your key objective when considering an investment vehicle is?
In responding to this question, 12 respondents (22.6%) urged that their primary
objective when considering the investment vehicle is to make income only.25
respondents (47.2%) make investment in order to make income and capital growth.12
respondents(22.6%) make investment for the purpose of having a balance and capital
growth while 4 respondents(7.5%) are motivated by capital growth only when
considering investment vehicle. The chart below depicts the various opinions of the
respondents when they consider investment vehicle.
-
7/29/2019 CHAPTER FIV MPYA1.doc
9/12
capital growthonly
balance andcapital growth
income andcapitalgrowth
income only
Objectiveofinvestment
25
20
15
10
5
0
Frequency
Objectiveofinvestment
As far as the above chart is concerned, majority of Tanzanian citizens are mainly
concerned with both income and capital growth while the few citizens give priority to
capital growth when considering investment vehicle.
5.1.5 One of the objectives of the Unit Trust of Tanzania (UTT) is to give opportunity
for majority of Tanzanian citizens to invest, take a stake in privatization, and further
participate in capital market. In your opinion, to what degree is this objective being
achieved by the Umoja Fund?
52 respondents gave their opinions on the degree to which the Umoja Fund achieved
its set objective. Only 4 respondents (7.7%) agreed that the fund has fully achieved its set
objectives.36 respondents (69.25) have the opinion that the fund has partially achieved
its objective.12 respondents (23.1%) had the opinion that the funds objective is
inadequately achieved. The results of the opinion given show that the objective of the
-
7/29/2019 CHAPTER FIV MPYA1.doc
10/12
Unit Trust of Tanzania (UTT) through Umoja Fund is not fully achieved. The chart
below depicts the opinions that were given by respondents:-
inadequately achievedpartially achievedfully achieved
Degree of achievement of Umoja
40
30
20
10
0
F
requency
Degree of achievement of Umoja
5.1.6 In terms of Tanzanian population taken as a whole what is your opinion about
the future success of the economic empowerment policy of Tanzania and Umoja
Fund in particular?
Respondents gave different opinions about the future success of the economic
empowerment policy.17 respondents(32.1%) were very optimistic about the future
success of the policy.21 respondents(38.9%) were somewhat optimistic about the future
economic empowerment policy.6 respondents(11.3%) were neither optimistic norpessimistic and only 1 respondent(1.9%) was very pessimistic about the policy. This
suggests that over 60% of the respondents are optimistic about the future of economic
empowerment policy being undertaken by the government through Unit Trust of
Tanzania and the Umoja Fund.
-
7/29/2019 CHAPTER FIV MPYA1.doc
11/12
verypessimistic
somewhatpessimistic
neither opt norpessimistic
somewhatoptimistic
very optimistic
Interm of tanzanian pop future success of policy
25
20
15
10
5
0
Frequency
Interm of tanzanian pop future success of policy
5.1.7 What do you anticipate will be the effect on the fund, when investors are free to
sell their units on the 1st August 2006?
The opinion given by the head of investment management is that initially there
would be more repurchase applications compared with sales (new investment in the
fund).The equilibrium stage will come when investors realize advantages of collective
investment schemes. As shown in the appendix (Net Asset Value-information), the net
asset value after the lock in period is has been decreasing dramatically. This suggests that
unit holders are liquidating their units.
-
7/29/2019 CHAPTER FIV MPYA1.doc
12/12
5.1.8 What is likely to be the effect of the recent strategies adopted by commercial
banks to provide loans and other products to compete with the Fund?
After the Umoja Fund going open on 1st August 2006 it is expected that the fund will
shrink as some investors would like to liquidate loans through repurchase of units while
other would like to realize gained income from(70 to over 110/-) per unit.
5.2
In the above analysis it is clear that the majority of respondents agree that the Umoja
Fund stimulates the saving culture among Tanzanian citizens and that the majority of
Tanzanian citizens can afford to buy the units at the current set price .Similarly majority
of respondents are more optimistic about the future success of the economic
empowerment policy. The net asset value of the Umoja Fund has been falling
dramatically since the end of the lock in period and the objective of the Unit Trust of
Tanzania (UTT) has not been fully achieved.
top related