Money Market Fund

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About the Chuuma Money Market Fund

The Chuuma Money Market Fund is a unit trust fund designed to cater to investors seeking a combination of stability, liquidity, and capital preservation. Managed by Chuuma Asset Management Limited, a company regulated by the Securities and Exchange Commission of Zambia (SEC), this fund invests primarily in short-term, high-quality money market instruments. Chuuma Asset Management Limited is committed to providing accessible investment opportunities, empowering individuals, and delivering solutions that meet the diverse needs of its clients.

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Investment Objective

The primary objective of the Chuuma Money Market Fund is to offer investors steady returns, easy liquidity, and the security of capital preservation. The fund achieves this by investing in a diversified portfolio of short-term, high-grade money market instruments, including treasury bills, bankers’ acceptances, and other liquid assets. This ensures that investors benefit from minimal risk exposure while maintaining access to their funds when needed.

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Key Highlights:

• Benchmark: The fund’s performance is measured against the 364 Treasury Bill issued by the Republic of Zambia through the Bank of Zambia, which serves as the benchmark. The objective is to deliver consistent outperformance by leveraging active management and market insights.

• Strategic Allocation: Assets allocated to money market instruments with a tenor of 1 year or less, with the remainder in other asset classes.

• Active Management: The fund’s strategy allows for adjustments to respond to market conditions, ensuring optimal performance.

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Investment Philosophy

Chuuma Money Market Fund operates on a foundational investment philosophy that emphasizes:

• Capital Preservation: The fund prioritizes the safety of principal investments by minimizing exposure to market fluctuations.

• Liquidity: The investment strategy ensures that the fund holds assets that can be quickly and easily converted into cash.

• Stable Returns: The fund is designed to provide a predictable and consistent income stream by focusing on high-quality, short-term investments.

The fund management team combines expertise and active portfolio management to strike a balance between risk mitigation and optimized returns.

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Asset Allocation

The Chuuma Money Market Fund employs a strategic yet flexible approach to asset allocation, balancing risk and returns while maintaining liquidity and capital preservation. The allocation framework is outlined as follows:

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Bonds and Short-Term Money Market Securities:

• Allocation: 10% to 80%

• Purpose: This core allocation provides stability and steady returns, focusing on high-quality, short-term government securities (e.g., treasury bills), negotiable certificates of deposit, and private debt securities. These instruments form the foundation for consistent income generation and reduced exposure to market volatility.

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Liquid Assets:

• Allocation: 0% to 20%

• Purpose: Liquid assets such as cash and cash-equivalent money market instruments ensure the fund’s ability to meet short-term obligations and redemption requests. This allocation also provides flexibility to capitalize on immediate market opportunities.

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Unlisted Securities and Alternative Investments:

• Allocation: 0% to 10%

• Purpose: These include investments in private debt securities, corporate bonds, and other instruments directly offered to the fund. This allocation seeks to enhance returns by accessing unique growth opportunities outside traditional markets while managing risk.

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Units or Shares of Other Collective Investment Schemes:

• Allocation: 0% to 10%

• Purpose: Investing in other collective investment schemes provides diversification and access to additional markets and asset classes that align with the fund’s objectives.

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Cash Reserves:

• Allocation: 2% to 10%

• Purpose: Maintaining cash reserves ensures operational liquidity, smooth redemption processing, and readiness to seize immediate investment opportunities.

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Rationale for Allocation

• Capital Preservation: The significant allocation to bonds and short-term money market securities ensures low risk while providing predictable returns.

• Liquidity Management: A reserve of liquid assets and cash guarantees the fund’s ability to handle withdrawals and short-term liabilities without disrupting the portfolio.

• Diversification: Allocations to unlisted securities and collective investment schemes reduce concentration risk and increase exposure to varied opportunities.

• Regulatory Compliance: Investments align with SEC-approved guidelines and ensure transparency and risk mitigation.

This allocation strategy ensures that the Chuuma Money Market Fund achieves its objectives of stability, liquidity, and moderate returns, catering to investors seeking low-risk investment options.

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Risk Disclosure for the Chuuma Money Market Fund

While the Chuuma Money Market Fund is designed to minimize risks, investors should be aware of the following potential risks:

• Interest Rate Risk: Variations in interest rates can influence the returns of money market instruments.

• Inflation Risk: The purchasing power of returns may decline if inflation rates exceed the fund’s income.

• Liquidity Risk: Certain instruments may not be easily sold at their true market value.

• Credit Risk: There is a risk that issuers of debt instruments may fail to meet their obligations.

• Operational Risk: Potential losses arising from inadequate or failed internal systems and processes.

• Regulatory Risk: Changes in regulations could affect the fund’s operations and performance.

Investors are encouraged to understand these risks and consult a financial advisor before making investment decisions.

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Permitted Investments

The Chuuma Money Market Fund is authorized to invest in a diversified portfolio of high-quality, low-risk instruments to meet its objectives of liquidity, capital preservation, and stable returns. The permitted investments include:

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Government Securities and Treasury Bills:

Investments in short-term government securities provide a secure and stable foundation for the fund, ensuring capital safety and predictable returns.

Bank Negotiable Certificates of Deposit:

High-quality certificates of deposit issued by licensed banks offer an additional layer of safety and liquidity for the fund’s portfolio.

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Private Debt Securities, Loan Stocks, and Corporate Bonds:

These investments provide opportunities for slightly higher returns while maintaining a low-risk profile through diversification.

Unlisted Securities:

The fund may invest in securities that are not publicly traded but meet the criteria set by the fund manager and trustee. This allows access to unique opportunities directly offered to the fund by issuers.

Units or Shares of Other Collective Investment Schemes:

Investments in other collective investment schemes provide diversification and access to broader markets, aligning with the fund’s risk and return objectives.

Cash, Deposits, and Money Market Instruments:

Holding cash and investing in money market instruments with licensed institutions ensures liquidity and the ability to meet short-term obligations.

Other SEC-Approved Investments:

The fund is permitted to invest in any other form of investment approved by the Securities and Exchange Commission (SEC), ensuring compliance with regulatory standards.

Manager and Trustee-Agreed Investments:

The fund may also invest in asset classes agreed upon by the manager and trustee, providing flexibility to adapt to market conditions and seize emerging opportunities.

This comprehensive range of permitted investments ensures that the Chuuma Money Market Fund maintains its core objectives of stability, liquidity, and consistent returns while adhering to regulatory requirements.

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Fees

The following fee structure applies to the Chuuma Money Market Fund:

Service Provider	Nature of Fees	Percentage Per Annum
Chuuma Asset Management	Management Fees	4.0%
AMG Global	Trustee Services	0.15%
Stanbic Bank Zambia	Custody Services	0.18%
Securities and Exchange Commission (SEC)	SEC Levy Fees	0.125%

Investors should review these fees carefully to understand the cost implications of investing in the fund.

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How to Invest in Chuuma Money Market Fund

Investing in the Chuuma Money Market Fund is simple and accessible through the following steps:

1. Registration: New investors can sign up via the Chuuma mobile app or USSD platform by providing required personal and financial details.

2. KYC and Verification: Complete Know Your Customer (KYC) procedures to ensure compliance with regulatory standards.

3. Investment: Use mobile money or linked bank accounts to purchase units in the fund. Investors receive confirmation of their investments, including the number of units allocated.

4. Monitoring: Investors can track their investments through the Chuuma app, ensuring transparency and ease of access.

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Redemption of Units

Investors can redeem their units in the Chuuma Money Market Fund after a minimum holding period of 91 days.

• Redemption requests can be made through the Chuuma mobile app or USSD platform.

• Redeemed funds will be credited to the investor’s account within 48 hours of the transaction being completed.

• Every redemption of units authorized by the investor will be credited to their account and accompanied by communication indicating the amount withdrawn and the units in the Fund shall be adjusted accordingly.

• Redemptions will be subject to transactional limits and fees.

• Investors cannot directly reverse or cancel any redemption transaction once authorized.

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Fund Information

Type of Unit Trust	Open-Ended Unit Trust
Currency of Denomination	Zambian Kwacha (ZMW)
Minimum Individual Amount (Individuals)	ZMW 50
Minimum Investment Amount (Corporate)	ZMW 500
Minimum Holding Period	91 Days
Risk Profile	Low to Medium Risk
Benchmark	365 Days Treasury Bill
Fund Manager	Chuuma Asset Management Limited
Trustee	AMG Global Trust Limited
Custodian	Stanbic Bank Zambia Limited
Regulator	Securities and Exchange Commission (SEC)

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Typical Investor Profile

The Chuuma Money Market Fund is suitable for investors who:

• Require a low-risk investment option to preserve capital.

• Seek stable and predictable returns.

• Need liquidity for short-term financial goals.

• Prefer a highly accessible investment platform.

• Have a short-term investment horizon.

This profile ensures that the fund aligns with the goals and risk appetite of its investors.

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Disclaimer

Past Performance: While past performance is not indicative of future results, Investors are reminded that returns are subject to market conditions and should not be seen as guaranteed.

No Guarantee: Returns on investment into the unit trust are not guaranteed and will depend on the overall performance of the fund.

Due Diligence: Investors should carefully review the fund’s risk factors, investment objectives, and terms and conditions before investing.

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Additional Information

• Compliance and Regulation: The fund adheres to all relevant regulations set by the SEC in Zambia.

• Anti-Money Laundering (AML): Chuuma implements robust AML and Counter-Terrorism Financing measures in line with Financial Intelligence Act (FIC Act No. 16 of 2020).

• Customer Support: For queries, contact Chuuma Asset Management via email at support@chuuma.com or phone at +260 762432603.

• Investor Education: Chuuma provides resources to help investors understand the market and make informed decisions. Please visit our learning site https://learn.chuuma.com  

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Collective Investment Schemes (CIS):

• Ideal for short to medium-term investments.

• Daily unit prices are calculated on a Net Asset Value (NAV) basis and is reflective on the daily unit price for the fund.

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Taxation:

• Exempt from Income Tax under the Second Schedule of the Income Tax Act.

• Eligible for Withholding Tax Exemption on dividend income and interest from savings accounts.

• Taxable on interest from corporate bonds, government bonds, and treasury bills.

• Subject to VAT where applicable.

Investors should remain informed about potential changes in tax laws that may affect returns.