The Net Asset Value (NAV) of the unit trust industry has reached Rs 11 billion by February this year.

It was Rs 6.7 billion in 2008 December.

There are 564 million units and over 23,000 unit holders now.

Around 65 percent of the NAV has been invested in equities while the balance is invested in fixed income, Securities and Exchange Commission (SEC) Director General Channa de Silva said.

The unit trust industry today indicates a sharp increase in the NAV. The investor confidence has enhanced steadily with the restoration of peace.

The Director General said they are targetting a higher number of unit trust holders. “It is a preferred mechanism for householders to invest in the stock market or in debt market through unit trusts. Unit trust is one of the best approaches for household investors as they receive a diversification to their portfolio,” he said.

An investor can enter into the unit trust market with a small amount of capital. Even for a small investor it is easy to enter into the market since the investor need not have to select in which company the investment should be made and need not have a frequent knowledge about the capital market.

These funds are managed by fund managers. The fund managers are under the purview of the SEC. New listings in the market and free float will support the industry. Therefore, unit trust is a well secure mechanism to invest, de Silva said.

He said the nature of the unit trusts was not understood by the investors due to the reasons of not widely marketed. Investors did not understand the concept and it is a long-term investment. This is why unit trusts were not as popular as shares,” he said.

“There is much potential for the fund managers to manage the pension industry and high network fund managers. These funds could be converted from savings to investments through professional fund managers,” de Silva said.

Source Daily News