Understanding CISs: Power of pooling

A COLLECTIVE Investment Scheme (CIS) is a financial arrangement where funds from multiple investors are pooled together to invest in diversified assets such as equities, bonds, money market instruments and real estate. Managed by professional fund managers, CISs enable both retail and institutional investors to access a diversified portfolio that would otherwise be challenging or costly to assemble individually.

This structure not only spreads investment risk but also reduces transaction costs due to economies of scale. Essentially, a CIS offers individuals an avenue to participate in capital markets with professional management, lower risk exposure and flexibility.

A Brief History of CIS Globally and in Tanzania

Globally, Collective Investment Schemes have evolved over centuries, with some of the earliest forms appearing in Europe during the 19th century.

These schemes emerged as a response to the growing need for risk diversification and professional fund management, especially during periods of economic growth and financial market expansion. In the United States and Europe, mutual funds became mainstream in the mid-20th century, driven by economic prosperity, financial literacy and regulatory frameworks that supported investor protection.

In Tanzania, the journey of CIS began with the establishment of the Unit Trust of Tanzania (UTT) under the Trustee Incorporation Act, Cap 318. UTT’s core objectives included developing collective investment vehicles, holding shares of privatised enterprises in trust and promoting a savings culture among Tanzanians.

UTT successfully launched six collective investment schemes, attracting over 90,000 investors across the country and managing over 3.065tri/-.

As of May 2025, the total funds managed under all schemes in the country reached 3.253tri/-. Notably, more than 11 schemes were opened from 2024 onwards, whereas previously, only UTT and Watumishi Housing Investment (WHI) were operational.

Why CISs Matter for Investors and the Economy

Collective Investment Schemes play a vital role in both individual wealth accumulation and broader economic development. For individuals, CISs provide access to professional fund management, diversification and reduced barriers to entry into financial markets.

Compared to other financial instruments, CISs offer several advantages: Diversification: By pooling funds, investors gain exposure to a wide range of assets, reducing the impact of poor performance from a single investment.

Professional Management: Experienced fund managers make informed investment decisions on behalf of investors. Economies of Scale: Pooling funds leads to lower transaction costs and access to a broader range of investment opportunities. Liquidity: Many CISs offer the ability to buy or sell units on a regular basis, providing flexibility to investors. Regulatory Oversight: CISs are typically regulated by financial authorities, ensuring transparency and investor protection.

At a macroeconomic level, countries with mature CIS industries, such as the United States, the United Kingdom and South Africa, demonstrate a positive correlation between the depth of their capital markets and overall economic growth.

The presence of strong CIS institutions boosts savings mobilisation, deepens financial markets, improves capital allocation and promotes financial inclusion. This, in turn, enhances longterm funding for both public and private sector projects.

The Current Landscape of CIS in Tanzania

Tanzania has made significant strides in developing its CIS ecosystem. Currently, the country hosts 18 registered CISs operated by seven licensed fund managers. This growth signals a rising appetite for professionally managed investment products and a maturing financial system that supports wealth building through structured investment vehicles.

The expansion of CIS offerings in Tanzania not only reflects investor confidence but also highlights regulatory progress and increasing public awareness of the benefits of collective investing.

Introducing INUKA Money Market Fund – Powered by Orbit Securities

Among the most recent additions to Tanzania’s CIS space is the INUKA Money Market Fund, managed by Orbit Securities, a licensed fund manager.

Launched in October 2024, the fund was designed to provide investors with a secure, shortterm investment avenue focused on money market instruments such as Treasury bills, short-term bonds and other fixed-income debt instruments across Tanzania, EAC and SADC regional countries. Starting with an initial fund size of 10bn/-, the fund has grown rapidly, now managing assets exceeding 14bn/-.

The Net Asset Value (NAV) per unit has risen from 100/- to over 107/80, reflecting an impressive annualised return of more than 14.7 per cent, surpassing its benchmark of 364- day T-Bill yield plus 50 basis points.

Why Money Market Funds Make Sense

Money Market Funds like INUKA offer distinct advantages: Lower Investment Risk: They carry lower investment risk compared to long-term instruments, particularly because they avoid extended exposure to inflation that affects longdated debt securities.

Higher Yield Opportunities: Their short-term nature allows fund managers to capitalise on higher yield opportunities, enabling better returns with more flexibility. Improved Market Liquidity: Historically, one of the challenges facing this market has been illiquidity due to a limited number of players able to fill supply and demand positions in money market instruments.

However, this has shifted positively, with an increasing number of market participant’s now actively trading and providing liquidity, enhancing the depth and efficiency of the market. This development supports monetary policy implementation, facilitates smoother capital flows, and ultimately strengthens the resilience of the financial system.

Conclusion

As Tanzania’s capital markets continue to evolve, CISs stand out as a key pillar in promoting inclusive finance, national savings and capital market growth. Products like the INUKA Money Market Fund not only provide individuals with attractive returns and safety but also help channel funds into productive economic sectors. With increasing investor education, regulatory support and market participation, CISs are poised to play an even greater role in shaping the financial future of Tanzania. For investors seeking a smart, professionally managed, and low-risk investment alternative, CISs especially money market funds offer a pathway to consistent financial growth.