Something unusual is happening in Ugandan household finance. Collective investment schemes, the legal name for unit trusts, held UGX 5.66 trillion by December 2025, a 47 percent jump in a single year, with more than...
Something unusual is happening in Ugandan household finance. Collective investment schemes, the legal name for unit trusts, held UGX 5.66 trillion by December 2025, a 47 percent jump in a single year, with more than 180,000 funded accounts, according to Capital Markets Authority figures reported in the Daily Monitor. Five years ago most families kept their short-term money in a bank account earning almost nothing, or in a fixed deposit they could not touch. Now a growing minority parks it in a fund earning double digits, accessible by phone, starting from UGX 100,000.
If your family runs pots, this instrument matters. Here is what a unit trust actually is, what it pays, what it costs, and where it belongs in a family plan.
A unit trust pools money from many savers and hands it to a licensed fund manager, who invests the pool in things an individual saver struggles to buy well alone: treasury bills, government bonds, fixed deposits negotiated at institutional rates, and sometimes shares. The pool is divided into units. When you deposit, you buy units. When you withdraw, you sell them back.
Three protections separate this from handing your money to a clever friend. First, the manager must be licensed by the Capital Markets Authority, which publishes the list on its licensed firms directory. Second, your money does not sit in the manager's own account; a separate trustee or custodian, typically a bank, holds the assets, so if the manager collapses the pool survives. Third, the fund must publish its unit price and report to the regulator.
The licensed unit trust managers as of 2025 include Old Mutual Investment Group (the UAP Old Mutual funds), ICEA Lion Asset Management, Britam Asset Managers, Sanlam Investments East Africa, SBG Securities (the Stanbic group), Cornerstone Asset Managers, and Xeno Technologies. The market is concentrated: the Monitor's analysis of CMA data found the top two managers controlled 78.5 percent of assets, with Old Mutual alone holding about UGX 3.01 trillion and ICEA Lion around UGX 587 billion as of June 2025. Always check the CMA list before sending money anywhere; unlicensed "investment clubs" borrow this vocabulary freely.
Most family money in unit trusts sits in money market funds, which hold short-term government paper and bank deposits. As of mid-2025 these funds were paying roughly 11 to 12 percent per year: the UAP Old Mutual Money Market Fund reported an annualized 12.01 percent in June 2025, per Level Africa's fund update, with peers clustered nearby and some, such as Britam's money market fund, guiding a more conservative 8 to 10 percent range. Rates move with government borrowing costs. The 364-day treasury bill cleared at about 12.5 percent in February 2026, down roughly three percentage points from late-2025 highs, as tracked by analyst Alex Kakande, and fund yields follow that curve down with a lag.
The mechanics are simple once stated. A money market fund earns interest every day on its holdings. Each day the manager deducts the management fee, then credits the remainder to unitholders, usually by increasing your unit balance or the unit price. The "annualized yield" published daily is yesterday's net earning multiplied out to a full year. It is not a promise. It is a weather report. Equity and balanced funds work differently: their unit price moves with the market, up and down, which is why they are a different tool entirely (more below).
Minimums are genuinely low. Cornerstone's shilling income fund starts at UGX 100,000 with UGX 10,000 top-ups; SBG Securities starts at UGX 100,000 with UGX 50,000 additions; Xeno goes lower via mobile money. Withdrawals from money market funds typically pay out within two to five working days.
Under section 21(1)(t) of the Income Tax Act, the income of a collective investment scheme is exempt from tax to the extent it is distributed to unitholders, a deliberate incentive for savings, as PwC Uganda explains. In 2023 government proposed a withholding tax of 5 percent on unit trust earnings for savers with under UGX 100 million and 15 percent above that, but Parliament dropped the proposal after pushback from the CMA and industry. Two honest caveats. The funds' underlying instruments already suffer withholding at source, so published yields are net of that reality. And a proposal dropped once can return in any budget cycle; treat the exemption as current policy, not a permanent feature.
| Feature | Money market unit trust | Bank fixed deposit | Treasury bill (direct) | |---|---|---|---| | Typical return, 2025-26 | ~11-12% gross of nothing further | Often below T-bill rates, negotiable | ~10-13% depending on tenor | | Access | 2-5 working days, any amount | Locked to maturity, penalty to break | Locked to maturity, secondary sale possible | | Minimum | UGX 100,000 or less | Bank-dependent, often 1M+ | UGX 100,000 via CSD, practical hurdles higher | | Effort | One signup, then mobile top-ups | Renegotiate every maturity | Auction bidding or broker each time | | Risk | Manager and portfolio risk, CMA-regulated | Bank credit risk, DPF cover to UGX 10M | Sovereign risk only |
The honest summary: a direct treasury bill is the purest instrument, but it locks money and demands attention at every rollover. A fixed deposit rewards those who negotiate hard and punishes those who do not. The money market unit trust buys convenience, diversification, and liquidity at the price of a management fee. For family pot money that must stay reachable, that trade is usually worth it.
In the LegacyPot structure, money market unit trusts are the natural home for two layers. The emergency floor, the three to six months of household costs that must never be locked or gambled, fits because the money stays days away, earns a real return, and sits outside the everyday account where it would leak. Medium-term pots, such as school fees due in one to three years or the deposit for a plot, fit for the same reasons.
What does not belong there is long-horizon money you will not touch for a decade. That is where equity or balanced funds, or direct long bonds, earn their keep, and where a money market fund quietly loses to inflation-beating assets over time.
The fee is invisible but real. Management fees are deducted daily before the yield you see. Ask every manager for the annual management charge and any entry or exit fees in writing, and compare funds on net published yield, not brochure promises.
Yield-chasing is a tax on attention. Moving UGX 5 million between managers for a half-percent difference earns your family about UGX 25,000 a year and costs you paperwork, transfer days out of the market, and a new set of statements to track. Pick one licensed manager with a competitive net yield and a working app, and review annually, not weekly.
Money market and equity funds are different animals wearing one name. Both are "unit trusts." One protects capital and pays interest; the other can fall 20 percent in a bad year. Confirm which fund your money is entering, in writing, before the first deposit. A family that thinks it bought a savings account and actually bought an equity fund discovers the difference at the worst possible moment.
Concentration is a quiet risk. With most of the industry's assets at two managers, an operational failure at one would be a national event. The trustee structure is your protection; confirm your fund's trustee is a regulated bank before investing.
Decide this at your next family money meeting: which licensed unit trust manager will hold your emergency floor, and what standing monthly amount feeds it. Name the manager, name the fund, confirm it is the money market fund, and set the mobile money standing instruction. A family that leaves this undecided keeps its floor in an account earning two percent, and inflation collects the difference every year.