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Market Commentary

Key Features

Fund Manager

CIC Asset Management Ltd

Launch Date

Nov - 20

Risk Profile

Low

Trustee

Kenya Commercial Bank

Custodian

Co-op Custodial Services

Auditors

PWC

Minimum Investment

USD 10,000.00

Minimum Additional Investment

USD 1,000.00

Initial Fee

Nil

Annual Management Fee

0.5%

Effective Annual Yield

3.78%

Distribution

Monthly

Who should invest?

Investors who are seeking ;

  • Capital preservation whilst not seeking long-term capital growth.
  • A high degree of capital stability and with a risk neutral appetite.
  • Currency diversification.
Key Benefits
  1. Liquidity: The client is able to withdraw their funds at short notice with no penalty fees.
  2. Flexibility: The client is able to switch or transfer funds to another fund that he/she may have with CICAM.
  3. Security: The fund invests in government paper and liquid instruments.
  4. Competitive Returns: Interest is calculated daily and credited at the end of each month. As an institutional client, the fund benefits from placing deposits in large sums and as such is able to negotiate for competitive rates.
  5. Professional fund management: prospective investors benefit from the expertise of our seasoned professionals.
Outlook

The fund will continue to grow and hence the need to diversify in a range of USD denominated securities i.e largely Eurobonds and Fixed deposits while maintaining a conservative risk exposure. We expect the rate to maintain current levels.

GDP
7
Economy Growth
In 2021

The economy averaged 6.9% growth by Q3’21 buoyed largely by re-opening of learning institutions (education sector +64.7%), manufacturing (+9.5%) and accommodation and food services (+24.8%) on eased restrictions after the third wave of covid-19. Kenya’s activity indicators point to a more upbeat pace of recovery in 2022 despite overhang risks. The emergence of vicious cycle of new variants has brought renewed fears globally amid politics taking centre stage as we gear up for elections. Given the impressive degree of recovery across sectors and full reopening of the country effective 20th October 2021, we expect economic growth to exceed the 5.3% forecasted by the government for the 2021/22 fiscal year in the budget review outlook paper.

Inflation
US Consumer Price Index for All Urban Consumers (CPI-U) Rose by
Dec 2021
0
Nov 2021
0

Kenya Inflation Rate
In Q4 '21
6
By Q3 '21
6

The US Consumer Price Index for All Urban Consumers (CPI-U) rose by 0.5% in December, a slower rate compared to the 0.8% increment registered in November. The indexes for shelter and used cars and trucks contributed the most to the seasonally adjusted all items index. The food index was still on the rise, however at a slower pace than the previous months. In Kenya, inflation averaged 6% in Q4’21 compared to 6.67% in Q3’21; largely due to regulatory intervention to tame local pump prices. Soaring global energy prices and a potential trigger of food supply shocks pose an upside risk on inflation in Kenya.

Exchange Rates
In Q4 '21
0
USD / Euro
In Q3 '21
0
USD / Euro
In Q4 '21 The Kes depreciated by


2


The Dollar closing at


113
to the $

The USD against the Euro, ending the quarter at $0.89/ EUR in comparison to $0.86/EUR recorded at the end of Q3. The Kes depreciated by 2.34% in Q4’21 to the dollar closing at 113.14 largely attributable to servicing of euro bond debt obligations and a marginal rise in our import bill. We expect the shilling to remain pressured on trade imbalance, higher crude oil prices and a strengthening USD in the global markets. The current FX reserves (5.36 months import cover) provide some cushion to CBK in their efforts to tame the depreciation and we believe the coming year will be one of focus in managing the exchange rate.

Interest Rates
The CBK maintained its benchmark rate at:

7
Interest rate

The CBK retained its benchmark rate at 7% in Q4’21, opining that the current accommodative stance is still needed to provide stimulus. Short-term rates inched up in Q4 with the 91,182 and 364-day papers closing at 7.27%, 8.09% and 9.37% respectively. The yield curve steepened in Q4 with rates rising on all tenors. We expect a rise in yields across the curve as the government seeks to plug the budget deficit. High levels of liquidity in the banking sector as well as local institutions guarantees this borrowing

Fund Performance

Asset Allocation

Statutory Disclaimer: The value of units may go down as well as up and past performance is not necessarily a guide to the future. There are no guarantee on the client’s capital as the performance of units in the fund is determined by change in the value of underlying investments hence value of your unit trust investment

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