Before the banking turmoil in Ghana, most fund managers (asset managers) in Ghana offered fixed deposit products with guaranteed returns, outside their mandate.

Fixed deposit products are typically products sold by government through treasury bills and bonds and banks as investments to finance their loan business. The core business of a fund manager is to invest your money in the best opportunities that provide attractive returns while reducing risk to investors.

My goal here is to simplify how you can invest with a fund manager. This article will not cover every point but you can join the Head of Fidelity Securities Ltd in a webinar as he explains investing in mutual funds in more detail on August 15, 2020 by registering at www.investingh.info

Because of the small number of people who understand how investments work and what their options are, you will find most Ghanaians only interested in investments that offer a fixed or guaranteed return in fear of the loss of some or all of their money. However, there are a lot of investment products available to investors no matter their risks, goals, time frame or amount while generally offering higher returns than fixed deposit products.

The Securities and Exchange Commission (SEC) is the statutory body setup to protect investors and the interest of the general investing public. You can think of them as the police of the investment industry. In 2018, the SEC issued a number of directives to all fund managers to desist from offering guaranteed returns and fixed-term investments and asked them to unwind any investments within 6 months. So, what are your options now that you cannot get a fixed/guaranteed return from a fund manager? There are two broad areas you can look at:

Mutual Funds/ Unit Trusts

Anybody can walk to a brokerage like SIC Brokerage Ltd and say they want to buy stocks or bonds; however, most people do not have the time, effort or knowledge to analyze companies and manage their own finances.

There is the option to ask your broker for advice and recommendations and the other option to buy a mutual fund or unit trust, collectively called mutual fund in this article. Mutual funds or unit trusts are investments that pool funds together from different investors to purchase investment securities like stocks, bonds, money market instruments, etc. and are operated by professional money managers. This means that you and a group of people (usually people you don’t know) come together and choose a professional to manage your money for you. The benefits here are numerous and include;

i. most mutual funds in Ghana accept a minimum of GHC20.00
ii. you get access to a professional with years of experience and knowledge of financial markets to manage your money
iii. fees are typically low
iv. you get regular reports of your investments
v. mutual funds follow certain investment guidelines so that they do not invest in things they shouldn’t, usually in their prospectus or investment policy
vi. they are regulated by the SEC

But it is important to know that there are a lot of mutual funds that meet different goals, have different risk profiles and mature differently. You can join a free webinar on August 15, 2020, to learn how to choose the best mutual fund for you by registering at www.investingh.info.

Private Wealth Management

A client under private wealth management does not have to join a mutual fund which has already been set up with stated goals, investment guidelines, etc.

Under private wealth, a fund is set up for you and tailored to your specific needs. As you have already figured, private wealth management is primarily useful to high-net-worth individuals and the minimum amount for private wealth in Ghana is GHC100,000.

Most private wealth management firms are fee-based. They charge their clients a percentage of the assets under management (amount you are investing) and offer a wide range of services to their clients from portfolio management, estate planning, tax management, to mortgage planning and management of trusts. Most fund managers in Ghana are private wealth managers.

Fund managers generally offer a lot more services including pension management and fund administration but it’s important you and I know what’s available when we want to invest in our future.