How XENO Investment works?

I recently posted some investment experiments I was trying with XENO. Several people have since asked what XENO is all about. In this article, I will try to explain my understanding and experience with XENO. Please note that I am not affiliated with XENO, and this is not sponsored content. You should directly contact XENO management for more accurate information. 

I first heard of XENO through a friend who is a Certified Financial Analyst. So out of curiosity, I googled it and checked out their website. I found the website user-friendly and decided to open an account online. I didn’t speak to anyone from XENO throughout this process. I also downloaded their app from google play store. I linked my MTN mobile money account to my XENO account and deposited 100k intoXENO. I then set up an education savings goal and allocated some of the cash towards this goal. I subsequently set up an emergency savings goal where I automatically save 10k daily through MTN mobile money.

XENO is a goal-based investing platform which enables someone to set specific goals and then invest towards them. XENO is licensed as a fund manager and unit trust manager by theCapital Markets Authority (CMA). XENO currently offers four unit trust funds, including XENO Uganda Money Market Fund, XENO Uganda Bond Fund, XENO Uganda Domestic Equity Fund, XENO Uganda Equity Fund. When you invest with XENO your funds are automatically distributed among these funds depending on your risk tolerance. For low-risk investors, most funds are in the Bond and Money Market Fund. For high-risk-tolerance investors, more investments are in the Domestic and Regional Equity Funds.

Units trusts are what you would call Collective Investment Schemes (CIS). Basically, different people pool resources and hand them to an investment manager who manages the investment on their behalf. Unit trusts should not be confused with investment clubs or SACCOs. In Uganda, unit trusts are regulated by the Capital Markets Authority (CMA) under the Collective Investment Scheme Act, 2003. The market has grown tremendously as adoption and awareness has increased.  CMA’s data indicates that licensed CIS Managers who include; UAP-Old Mutual Financial Services Limited, ICEA Lion Asset Management Limited, Britam Asset Managers Uganda Limited, XENOTechnologies Uganda Limited, and Sanlam Investments East Africa Limited had a total of UGX 1.15 trillion inAssets Under Management (AUM)at the end of March 2022. At the same time, the total number of Ugandans with CIS accounts at the end of March 2022 was 32,998.

XENO seems to be largely targeting the retail investors and has deployed technology to enable access to as many people as possible (XENO has the largest retail base sign up with over 20,000 customers). For example, I find their website and mobile app quite customer friendly. They are quite responsive to customer queries on their WhatsApp number. I also love their planner tool on the app, where you can simulate different scenarios to achieve a specific goal for a certain risk level. They have also recently launched a partnership with MTN where all MOMO subscribers can save and invest by simply dialling a USSD code [*165*5*7#]. I particularly love the autosave feature where you can save and invest automatically from your mobile money account at specific intervals of daily, weekly, or monthly. Plus, the minimum investment is only ugx 10,000 and there are no transaction charges. This is such an ingenious strategy and I believe with proper awareness it will drive the savings and investing culture and increase financial inclusion.

There are several benefits to investing inXENOunit trusts. First, unit trusts are a very simple investment vehicle. It’s very easy to sign uponline and through their app. You can also start investing with as little asugx 10k. There is no active management by the investor. It’s really a passive form of investment. You can access your account statements online and through the app. So, it’s ideal for working people who don’t have the time or energy to run side hustles or businesses. It’s also an easy way to diversify your investments for anyone in business.

Second, XENOunit trusts are quite flexible. There are several options to choose from depending on your needsand risk profile. You can choose between bonds, money markets, and equities. You can also deposit and withdraw any amount of money at any time. This flexibility provides a truly liquid investment.

Third, the return on investmentis fair given the low-risk nature of unit trusts. Most of the underlying assets are in regulated assets like treasury bonds and bills. You can also benefit from the compounding effect by leaving your funds intact for some time.The returns you earn from XENO depend on your risk level, the amount you deposit, and how long you invest. Typically, unit trusts earn about 9% to 12% per year. Also, the interest income earned by unit trusts is currently tax exempt.

Finally, XENO unit trusts are regulated by the CMA. There is also a governance structure around them. The actual assets are held by a custodian who is usually a bank. There is also a trustee who oversees the whole operation. Finally, you have a professional manager who actually does the fund management. Because of this regulation, unit trusts are fairly safe compared to other investments.

From my experience the best approachwith XENOhas been to first identify my investment goal. For example, it could besetting up an emergency fund. I then typically automate the saving decision using [*165*5*7#] on MTN. So, every day,10k is automatically sent toXENO from my phone. This simple practice has enabled me to accumulate some liquid cash which I can use to meet my everyday needs.

In conclusion, XENO unit trusts are some of the simplest investment vehicles out there. They are relatively safe, passive, give moderate returns, and are quite liquid. I would definitely recommend anyone to have XENO unit trusts as part of their asset portfolio.