| dc.description.abstract | This study was conducted to assess the relationship between Unit Trusts performance and the asset allocation in Kenya for a selected sample of the Companies licensed by the Capital Markets Authority under the Collective Investment Schemes. The study further looked at the operations of Unit Trusts in Kenya and analyzed the performance of those Unit Trusts that trades on Equity funds. A questionnaire was administered to all the selected companies in the sample. However, two of the selected sample companies did not respond, leaving a high response rate of eighty three percent which was adequate for the study.
Further the study sought to find out the application of Portfolio management in the management of Unit Trusts in Kenya and more appropriately in the selection of Equity assets to invest the Unit Trust Funds. Fund managers were observed to utilize the portfolio management techniques in the conduct of the asset selection for Equity Unit Trusts. The selection of high risk Equity stocks in the Nairobi Stock Exchange resulted in high performance in the reported returns on investments. This is in tandem with the portfolio management theory on selection of risky assets that yield higher returns.
The research data was corrected from the Nairobi Stock Exchange for the period ended 31st December 2009 and took into consideration the Effective Yield and the reported Daily Yield for the selected sample. The performance was regressed against the asset allocation and empirically analyzed. The analysis revealed that there was a positive correlation between the reported Equity Unit Trust performance and the asset selection that Fund Managers have identified or preferred to invest in the Nairobi Stock Exchange.
Therefore we can deduce that most companies trading in Unit Trusts under the Collective Investment Schemes would prefer to invest in Equity assets in order to report higher earnings for the funds under management. However, the regulator has often given guidelines on the asset allocation criterion and more often than not, the regulator; Capital Markets Authority issues guidelines on the limits of proportionate funds to be invested in the Equity funds, money market funds, and other investment sections | en_US |
