The net asset value (NAV) of the UTs increased by 37 per cent to Rs. 30.9 billion as at end December 2012, from Rs. 22.5 billion as at end December 2011. Although 12 new UTs were set up during the year, those with significant investments in equities were affected by the continued decline in stock market prices during the first half of the year. However, most funds have been able to perform better than the price indices of the CSE on account of portfolio management and diversification, the Central Bank said in its recent annual report.
"The value of investment in government securities also suffered from marked to market losses due to increasing interest rates until the rates started to decline towards the end of the year. The shares of equities and government securities (Treasury bills, Treasury bonds and Reverse Repos) in the investment portfolios of unit trusts declined to 28.5 per cent and 19.1 per cent, respectively, from 42.3 per cent and 48.6 per cent, respectively, as at end December 2011. The share of other investments including investments in commercial paper, debentures, trust certificates and fixed deposits with banks, increased significantly to 52.4 per cent," the bank said.
"There were 37 Unit Trusts (UTs) in operation (including 12 new UTs) managed by 11 Unit Trust management companies by end December 2012. Of these, 35 UTs were open-ended funds and 2 UTs were close-ended funds. When UTs in operation were categorized according to their investment focus, there were 7 income funds, 6 money market funds, 6 growth funds, 4 equity funds, 4 balanced funds and 4 gilt edged funds by end 2012. In addition, there are 6 specialised funds in the areas of Sharia, IPOs, tourism and finance. One close-ended fund is listed on the Colombo Stock Exchange.
"A positive development was the increase in the total number of unit holders and the units issued. While the number of unit holders increased from 23,403 at end 2011 to 27,253 by end 2012, the number of units issued increased to 2,227 million by end December 2012 from 1,286 million at the end of 2011. With a view to broadening the investor base and stimulating the formation of different types of UTs and new products, the Securities and Exchange Commission issued a direction making it mandatory to allocate 10 per cent of shares of all Initial Public Offerings to UTs. Further, foreign investments in UTs have been allowed. The inclusion of a regulatory framework for Exchange Traded Funds (ETFs) in the Unit Trust Code is expected to pave the way for the introduction of such funds in Sri Lanka," the Central Bank said.