Previously, Kenya’s investment landscape was inaccessible for the average retail investor. The environment was characterised by exorbitant entry barriers, resulting in limited investment solutions in the market.
This scenario restricted individuals looking to diversify their portfolios affordably. Added to this was the proliferation of unlicensed online trading firms that made it difficult to distinguish genuine actors from unscrupulous ones. In short, Kenyan investors were frustrated.
Standard Investment Bank (SIB), one of Kenya’s foremost indigenous investment banks, sought to ease the frustrations by launching MansaX, a global markets product, in December 2018. Before that, SIB’s mainstays were fixed income, equities, corporate financial advisory, asset management and research.
The equities arm of SIB trades in companies’ stocks and derivatives. In July 2019, it made SIB the first institution in Kenya to execute the first derivatives futures trades.
The fixed income division, on the other hand, trades in fixed income products for local and foreign institutional investors. It focuses on government bonds, corporate bonds and treasury bills.
SIB’s research arm is responsible for the rigorous due diligence necessary to provide insights on investment opportunities.
Finally, the company’s corporate finance department has worked with a number of the region’s largest public and private institutions to inform their strategic growth, structure their balance sheets, raise capital and restructure their enterprises. To this end, the corporate finance arm has overseen over KES 200 billion worth of transactions for companies in East Africa. Some of the notable transactions it oversaw were KCB Group’s takeover of National Bank and Kenol-Kobil takeover offer made by Rubis SAS.
One year prior to SIB’s launch of MansaX, the Capital Markets Authority Online Forex Trading Regulations 2017 was released to regulate the quickly growing online trading industry. The Act outlined the various requirements any firm would have to meet to be recognised as a dealing or non-dealing forex broker or online forex money manager. Having satisfied these requirements, SIB applied for and was granted the first online forex money manager license in Kenya in December 2018, and thus MansaX was born.
MansaX is a multi-asset strategy fund that invests in financial instruments, both local and global. Its objective is to create capital growth for investors.
The fund gives investors an easy yet affordable entry point into the global markets, a credible and compliant fund manager to oversee their investments, and a way to diversify their portfolios.
MansaX is one of the most highly diversified funds in the Kenyan market. It invests in several assets within the following classes: major and emerging world currencies, cash and fixed income, derivatives, commodities, and precious metals. This approach creates more opportunities for the investor to earn a return while reducing volatility and safeguarding capital against adverse market cycles.
Since risk is inherent to investments, risk management is a core component of MansaX’s overall strategy. Specifically, the fund manages risk by taking conservative positions on trades to protect investor funds, even when bullishness could result in greater profit.
The ability to take both long and short trading positions also ensures that even when markets are losing value, MansaX can still squeeze out a return, a market-play that rewarded the fund handsomely when the oil prices plummeted earlier in the year. On top of this, the fund has exposure limits and stop loss limits to safeguard investor capital in the event of a trading misstep.
Furthermore, MansaX has a capable and highly experienced team of traders hired from treasury departments of local commercial banks, led by Nahashon Mungai, who heads up SIB’s global markets division. Needless to say that the fund’s strategy of investing in several asset classes is also crucial in managing risk for MansaX investors. The fact that it is highly diversified reduces the fund’s overall risk because losses in certain asset classes are offset by gains in others.
This formula is working well. In 2019, its first full year of trading, MansaX achieved a return of 24.01 percent. The fund is set to match this impressive performance, having already delivered an annualised return of 23.3 percent in the first nine months of 2020.
As the fund continues to grow, some lessons can be drawn from its performance so far. First, there is a constant need to identify and capitalise on new segments in investments. An example is the global markets’ space, which is full of opportunity.
Furthermore, the adoption of technology and innovation will lead to further growth. Most importantly, investor needs must take centre stage when new products and services are being designed for them.