Friday, January 18, 2008
By Joan Chirwa
Friday January 18, 2008 [03:00]
THE Securities and Exchange Commission (SEC) has granted authorisation to Equity Capital Resources Plc for a new collective investment scheme on the local market effective December 2007. Equity Capital Resources (ECR) Plc - a financial advisory and asset management firm - will operate the fourth of collective investment schemes in Zambia besides Cavmont, Intermarket Banking Corporation and African Banking Corporation which are running the Cavmont Income and Growth Fund, ABC Unit Trust and Intermarket Unit Trust.
ECR Plc director Nathan DeAssis, in an interview, said the investment scheme - which is expected to be officially launched this April - would be run in partnership with AGM Global Trust Company and a selected bank as trustees and custodian respectively for the Equity Capital Resources Unit Trust.
"With regard to investment, the key element in all investment activities is how to manage the risk process and everything has a level of risk and it is what you do with the risk factors rather than worry about the risk itself that makes good investment sense; my own philosophy is that if it does not make money sense then I do not invest," DeAssis said. "A unit trust allows the unit holder to make investment without worrying too much about the risk because of the professional nature of the parties undertaking the management process and adherence to prudent regulatory requirements through the Securities Act of Zambia."
A collective Investment Scheme operates on a basis of a mutual fund that allows the unit holders a direct participation in the operations of the scheme through appointment of a management company, trustee and custodian of the assets.
It is also a vehicle used to pool investors' money to make multiple types of investments, known as the portfolio.
"Shares, bonds and money market funds are all examples of the types of investments that may make up a collective investment scheme. The collective investment scheme is managed by a professional investment manager who buys and sells securities for the most effective growth of the fund," DeAssis said. "As a collective investment scheme investor, one becomes a "shareholder" of the collective investment scheme vehicle.
When there are profits they will earn dividends. When there are losses, their shares will decrease in value. Collective investment schemes are, by definition, diversified, meaning they are made up of a lot of different investments. That tends to lower risk of an investment; it does not eliminate risk completely but mitigates the levels of risk associated with an investment."