Old Mutual in prescribed assets headache

RYAN CHIGOCHE

Old Mutual Investment Group is battling to meet the minimum regulatory prescribed assets requirements due to the quality of assets in the market and liquidity challenges, the company has said.

Speaking at a recent analyst briefing, Old Mutual Investment Group managing director Marjorie Mayida said it would take a long time for the company to meet the prescribed asset ratio as the market lacks quality prescribed assets.

“Currently our funds under management are not meeting regulatory prescribed assets ratio (but) this is not peculiar to Old Mutual its across the industry,” Mayida said.

She said the company, however, made significant progress towards meeting that regulatory threshold although it “will take a bit of time” adding they “very grateful to the regulator for understanding us and giving us headroom for us to be able to work towards achieving the regulatory threshold”.

“…There are two challenges, the first one being the availability of quality assets in the market and more recently the issue of liquidity,”  Mayida said.

Last year, the government gave prescribed asset status to seven major projects with only two being United States dollar-denominated for players in the pensions industry to invest in and meet their ratios.

In a functioning economy prescribed assets, such as stocks, bonds or other types of government paper are expected to generate significant returns but it hasn’t been the case locally with economic fundamentals playing a significant part.

Mayida said the introduction of gold coins and its prescribed asset status will provide a better investment alternative as they work on meeting the ratios. 

“We now have an option to invest in gold coins which have been accorded prescribed asset status and that has significantly assisted us so we continue to work on the regulators as we work towards meeting the prescribed assets thresholds,’’ she said.

In the half year to June 30 2022, the asset management business contributed just 1% to the group’s profit as fund under management recorded a marginal growth of 9% to ZWL$586m driven by above inflation returns on properties and alternative investments portfolio.

In the second half of the year, the group said it was going to ramp up efforts to diversify our portfolio into alternative investments, including forex generating property sectors.