Britam Asset Managers, one of Kenya’s leading investment management firms, has launched a USD Fixed Income Fund aimed at providing both local and international investors with a secure and competitive investment option amidst increasing economic volatility. The new fund, which offers a diversified portfolio of fixed-income securities, is designed to deliver attractive returns while safeguarding investors’ wealth through investments in local and offshore interest-bearing assets.

The fund will invest in a range of financial instruments, including bank deposits, Treasury bills, structured notes, sovereign bonds, and other cash or money market funds. This strategic blend of assets aims to minimize risk while ensuring liquidity and yield for investors looking to diversify their portfolios in USD-denominated assets. With a minimum investment threshold set at $1,000, the fund is accessible to individual investors and businesses alike, with options for top-ups starting from $500.

Meeting the Rising Demand for USD Investments

Barack Obatsa, Chief Executive Officer (CEO) of Britam Asset Managers, emphasized that the USD Fixed Income Fund has been introduced in response to growing demand from both local and international investors seeking to protect their wealth in an increasingly unpredictable financial landscape. “The USD Fixed Income Fund represents stability in uncertain times,” Obatsa remarked. “The fund offers a timely opportunity for investors to safeguard their investments in a liquid fund that provides hard currency returns.”

In a market characterized by currency volatility, particularly with the Kenyan shilling facing continuous depreciation against major currencies like the US dollar, Britam’s new fund offers a viable solution for investors concerned about devaluation risks. By holding assets in US dollars, the fund provides a hedge against currency fluctuations while delivering competitive returns. This makes it especially appealing to investors with future USD-denominated expenses or income, such as businesses involved in international trade or individuals planning to pay for education or property abroad.

Competitive Returns and Capital Stability

Obatsa assured potential investors that the fund’s objective is to maximize total returns while maintaining capital stability and keeping portfolio volatility to a minimum. “The fund’s primary goal is to deliver competitive annual returns by investing in a diversified portfolio of debt and bond securities,” he noted. He further added that this diversified approach would help investors achieve income growth while managing risk, as the fund will allocate investments across multiple fixed-income assets.

Fixed income securities, including Treasury bills and bonds, have long been viewed as low-risk investments with steady returns, especially in volatile economic environments. With the inclusion of both local and offshore securities, Britam’s USD Fixed Income Fund provides exposure to international markets while ensuring that local investors can access the global fixed-income space without directly purchasing foreign assets themselves. This helps diversify risk and offers a buffer against potential underperformance in any single market.

Stability in Times of Currency Volatility

The fund’s launch comes at a critical time when global markets are facing economic pressures. In Kenya, for instance, the ongoing depreciation of the Kenyan shilling has heightened concerns about the future of local-currency-denominated assets. As of October 2024, the shilling has fallen to historic lows, trading at around KSh 150 against the US dollar, causing significant erosion in the value of local savings and investments.

For many investors, holding assets in US dollars has become a priority to mitigate the adverse effects of currency devaluation. In this environment, Britam’s USD Fixed Income Fund offers an effective hedge, enabling investors to maintain the value of their investments despite local currency fluctuations. “This fund addresses the increasing demand for dollar-denominated investment options,” Obatsa said, underscoring the importance of the new offering in helping clients navigate these challenging conditions.

Key Target Audience for the Fund

Britam’s new USD Fixed Income Fund is designed to meet the needs of a diverse range of investors. One of the primary target groups includes investors with USD-denominated future expenses, such as families with children studying abroad or those planning to purchase property in the US or other dollar-pegged regions. Additionally, investors with USD income, such as individuals working in expatriate positions or companies involved in export activities, are expected to find this fund particularly beneficial.

Moreover, the fund is aimed at those who are concerned about potential currency devaluation in Kenya and other African countries. With the Kenyan shilling and other regional currencies struggling against the dollar due to a combination of factors—including rising global interest rates, inflation, and debt burdens—the need for stable, dollar-denominated investment options has become more urgent than ever.

A Tailored Financial Solution

The USD Fixed Income Fund reaffirms Britam’s commitment to providing tailored financial solutions that meet the evolving needs of its clients. As one of the leading asset managers in Kenya, Britam has built a reputation for innovative products that offer both security and competitive returns in challenging market conditions. With the launch of this new fund, the firm continues its tradition of helping investors navigate financial uncertainty by providing sound investment options that address real market needs.

The fund also complements Britam’s broader investment strategy, which includes a wide array of local and international funds tailored to different investor profiles. By offering products that range from high-growth equity funds to conservative fixed-income options, Britam ensures that it can cater to both risk-tolerant and risk-averse investors alike. The USD Fixed Income Fund, in particular, is ideal for investors who prioritize capital preservation and stable returns over high-risk, high-reward investment strategies.

Enhancing Investor Confidence

With the global economy facing a multitude of challenges, from inflationary pressures to geopolitical tensions, investor confidence has taken a hit in many regions. In Africa, in particular, the rising cost of borrowing, coupled with currency depreciation, has made it increasingly difficult for local investors to protect their wealth. Britam’s USD Fixed Income Fund offers a safe harbor in these turbulent times, allowing investors to not only preserve their capital but also achieve a reasonable rate of return.

Obatsa expressed confidence that the fund’s launch would help restore investor confidence in the local market by offering a product that combines stability, yield, and liquidity. He noted that while the Kenyan economy continues to show resilience in certain sectors, the benefits of holding US dollar-denominated assets cannot be overstated in the current environment. “This fund is designed to meet the needs of a broad range of investors, from individuals seeking to protect their savings to businesses looking to diversify their portfolios,” he concluded.

A Strategic Move in Uncertain Times

As global markets continue to grapple with economic uncertainty, Britam’s launch of the USD Fixed Income Fund is a timely and strategic move that is likely to resonate with investors looking for security and stability. With its focus on a diversified portfolio of fixed-income securities, the fund offers a balance between risk and reward, making it an attractive option for conservative investors in Kenya and beyond.

For many, the decision to invest in USD-denominated assets is no longer just an option but a necessity. The continued weakening of local currencies across Africa and the growing volatility in emerging markets have made it increasingly clear that holding assets in a hard currency like the US dollar is one of the best ways to safeguard wealth in uncertain times.

With Britam’s new USD Fixed Income Fund, investors now have a secure and high-yielding opportunity to diversify their portfolios, protect their wealth, and achieve stable returns, even as the global economy remains unpredictable. As the fund grows and attracts more investors, it is likely to play a significant role in shaping the future of investment strategies in Kenya and the broader African market.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

4th October, 2024