The Chief Executive of MET Capital Group Limited, Eugene Asiamah Boadi is pressing for the establishment of an Inter Fund-Managers Market.
He is comparing this to the Inter-Bank market where universal banks are able to access funds with ease and at a moderate rate to meet their short term financial obligations.
According to him, it is about time the Securities and Exchange Commission considered creating a similar platform for investment firms to enable them also meet credit requests by their clients to develop their industry.
Speaking at the launch of his company’s Wealth Unit Trust Scheme, he noted creating an Inter-Fund Managers Market would ensure demand and supply of funds are synchronized on a regulated platform to reduce risk of borrowing as pertains on the open market borrowing
“There are many players in this industry (about 105) with a huge potential to increase this number in the future.. It is envisaged that the rate of non performing financial instruments will reduce significantly because in the instances where players are forced to lend deposits to borrowing customers (whether they are credible or not) in the name of building assets out of their liabilities to earn returns on these investments by hook or crook will not be necessary.
“In the absence of credible customers to lend these funds to, these players will have other players with better asset-based customers (in terms of good collateral, strong cashflow, viable business with appreciable turn around, etc) to whom they can lend these funds to with a relatively minimal risk. The opportunities that this platform will create are endless and should be given prompt attention” he said.
He later explained this to Joy-Business the move should ultimately help retain the confidence of the public in fund managers.
“Most of our funds are locked up for a period and that we might not really need day-to-day withdrawals to meet our liquidity needs. But again there is one thing to understand that, there are also some impromptu withdrawals in our market. A client invests about a million with you and in a month or two; he says I invested it for 6 months but requests about six hundred thousand of his investment.
“You see, ordinarily, fund managers would have placed those funds they took from this investor and so as and when such shocks come up, we’re saying that can we have a market like that , so that we could fall on our sister fund managers” he said.
He adds, the call is backed by empirical evidence.
“I carried out a research into how investors perceive us and some investors complained that they are more comfortable leaving their monies with the banks because we can get it at anytime. However when it comes to fund managers, the trust is not really there because some say when their investments matured and we needed our funds, there were stories here and there.
“We’re therefore trying to minimize this by creating a platform that when it becomes necessary for an impromptu withdrawal, a fund manager could fall on another” he concluded.
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