South Africa News

Absa shuts down massive unit trust

ABSA's new logo. (Photo: Supplied)

(Supplied)

In an extraordinary move, Absa has decided to close its popular Absa Money Market Fund. It says that many investors in the fund are under the mistaken impression that it guarantees the unit trust.

South Africans have invested almost R86 billion in the unit trust, which has been around for 25 years.

The money market is where banks and other institutions lend and borrow money for short periods of time — anywhere from one night to a couple of months. Money market funds invest in these short-term credit assets. These unit trusts seek to give a better return than a one- to three-year fixed deposit bank accounts, and are seen to be among the most conservative investments.

But a survey showed that the majority of its retail clients believe the fund capital and its returns are guaranteed by the bank, Absa said in in a statementfirst reported by Business Day.

“However, the [money market unit trust] is not a bank account – it is a collective investment schemes product (also known as a “unit trust”) and therefore capital and returns are not guaranteed. We have therefore decided to close the [fund] as of 6 July 2021 (the closure date), in the best interest of our clients, and given our findings that the majority of retail clients believe that their capital and returns are guaranteed.”

Investors in the fund will receive their investment back, or they can switch to another fund before 1 July.

The bank says investors can be transferred to an Absa investment bank account, which is guaranteed by the bank and currently offers 4.5% a year “which is equivalent or better than what you are currently receiving from your (money market fund) investment”.

The Absa money market fund’s effective yield dropped from 6.74% a year ago to 3.85% by February.

Go to the Business Insider front page for more stories.

Ogyem Solomon

Solomon Ogyem – Media Entrepreneur | Journalist | Brand Ambassador Solomon Ogyem is a dynamic Ghanaian journalist and media entrepreneur currently based in South Africa. With a solid foundation in journalism, Solomon is a graduate of the OTEC School of Journalism and Communication Studies in Ghana and Oxbridge Academy in South Africa. He began his career as a reporter at OTEC 102.9 MHz in Kumasi, where he honed his skills in news reporting, community storytelling, and radio broadcasting. His passion for storytelling and dedication to the media industry led him to establish Press MltiMedia Company in South Africa—a growing platform committed to authentic African narratives and multimedia journalism. Solomon is the founder and owner of Thepressradio.com, a news portal focused on delivering credible, timely, and engaging stories across Ghana and Africa. He also owns Press Global Tickets, a service-driven venture in the travel and logistics space, providing reliable ticketing services. He previously owned two notable websites—Ghanaweb.mobi and ShowbizAfrica.net—both of which contributed to entertainment and socio-political discussions within Ghana’s digital space. With a diverse background in media, digital journalism, and business, Solomon Ogyem is dedicated to telling impactful African stories, empowering youth through media, and building cross-continental media partnerships.

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