Asset management firm, Bard Santner Investors, unveiled a gold coin unit trust this week.
The gold coin unit trust offers investors an inflation- proof asset at a time when there is loss of value in investments due to inflation.
The Bard Santner gold coin unit trust is in response to clarion calls by the Reserve Bank of Zimbabwe (RBZ) to introduce new products leveraging on the gold coins introduced in July.
Monetary authorities said the gold coins were an alternative source of investment and also to mop excess local balances, blamed for fuelling the parallel market leading to the rout of the local currency.
The minimum investment in the gold coin unit trust is US$120 which can also be made in monthly instalments of US$15 or equivalent in local currency at the prevailing interbank rate.
A minimum of 80% of the fund is invested in gold coins with the balance in near-cash securities.
Such innovation is lauded as it gives local investors a stable asset to invest in and beat inflation.
Financial institutions should take up the cudgels to build a savings culture. After watching their savings decimated by hyperinflation, local investors play a wait-and-see attitude. They want assurance that their investment is safe.
This means that monetary authorities should maintain such a policy to build confidence in the gold coin unit trust. Any policy flip flop takes the economy back to the dark era where policy uncertainty was the staple food.
The increase in domestic savings is key in growing the economy at a time Zimbabwe has been struggling to get cheap lines of credit from international financial institutions.
Gold is seen as a safe haven by investors and was the last asset class standing following global turmoil after Russia invaded Ukraine in February last year.
The asset manager said it had turned to gold as it is a defensive asset and can withstand market and exchange volatility prevalent at the material time. It said global uncertainties brought about by wars and pandemics have seen gold prices increasing by 50% between 2017 and 2022 while global production has shrunk by 10% over the same period.
At the launch of the Mosi-oa-Tunya gold coins in July, RBZ governor John Mangudya exhorted banks and insurance firms to come up with new products that allows more locals to invest in gold coins.
“Insurance companies and banks can make other products out of these gold coins. They can do gold unit trusts where they do aggregation, the likes of Old Mutual, Zimnat and others. This is an opportunity for them to also make money out of this product whereby they can come up with unit trusts. Unit trusts mean an aggregation of those who are not able to buy at $1800,” Mangudya said at the launch.
Bard Santner Investors has taken the first step as it sees a golden future ahead.