Unit Trusts in Zambia (2026): How They Work, Who Holds Your Money and How to Check a Fund

What a unit trust actually is

A unit trust pools money from many people into one professionally managed portfolio. You buy units, each unit is a slice of everything the fund owns, and the value of your holding moves with the value of that portfolio. If the fund holds Treasury bills, bank deposits and government bonds, you own a proportional share of all of them, without having to bid at auctions or manage maturities yourself.

Zambian law puts it more formally. The Securities Act, No. 41 of 2016, defines a collective investment scheme as a scheme in which members of the public contribute money to a portfolio and "share the risk and the benefit of investment in proportion to their participatory interest". A unit trust is one form of collective investment scheme, set up as a trust in which investors are beneficiaries who participate proportionately in the income or profits.

Two words in that definition matter more than anything a salesperson will tell you: risk and proportion. A unit trust is not a savings account with a nicer interest rate. You carry the investment risk, and the law is built around that fact.

If you are still deciding between a fund, a bank account and buying government securities yourself, start with our overview of how to save and invest in Zambia and our guide to buying Treasury bills. This article goes one level deeper into how funds work, what protects you and how to check a fund before you hand over money.

The structure that protects you

The protection in a Zambian unit trust does not come from a guarantee. It comes from separation: the company that makes the investment decisions is not the company that holds the assets.

Under Part X of the Securities Act:

• The Securities and Exchange Commission (SEC) must authorise every scheme (section 121). The application must come from a licensed dealer or investment adviser, and the SEC must be satisfied that the manager is competent and that the manager, trustee or custodian are bodies corporate registered with it.
• Management and custody are split. The scheme must be structured so that effective control of its affairs is vested in a manager "and exercised independently of the trustee or custodian" (section 121(3)(c)).
• The trustee or custodian holds the property. Section 124 is one line long and is the most important sentence in this article for an investor: "The property of a collective investment scheme shall be held by a trustee or custodian on behalf of participants." The fund's assets are not the manager's assets.
• Managers, trustees and custodians must each be authorised as fit and proper persons (section 123). Carrying on business as one without authorisation is an offence.
• Foreign funds need a Zambian agent. An offshore fund can only be declared an authorised scheme if its manager has an authorised agent in Zambia and investors are entitled to redeem at a price related to the net value of the fund's property (section 125).

Selling or promoting an unauthorised scheme is a criminal offence. Sections 121(5) and 122 set the penalty at a fine of up to 500,000 penalty units, which is K200,000 at the current penalty-unit value of 40 ngwee, or up to five years' imprisonment, or both. The SEC may also issue public warnings against unauthorised promotions.

What a unit trust is not: insured, guaranteed or tax-free by default

It is not covered by deposit insurance. Zambia's Deposit Insurance Scheme, operational since October 2025, protects deposits at member institutions up to K250,000 per depositor, per institution. Units in a fund are an investment, not a deposit, so that cover does not reach them, even when the fund itself holds bank deposits. Our guide to whether your money is protected covers the deposit scheme in full.

It is not guaranteed. ABC Asset Management's own key facts statement puts it plainly: the manager "does not provide any guarantee either with respect to the capital or the return of a fund". It also notes that because these are investment products and not insurance policies, "cooling off periods do not apply".

A fixed K1 unit price is not a promise. Many money market funds hold the unit price at K1 and pay returns as extra units. ABC's own explanation of its funds says that constant price "may be adjusted downward" if necessary. A price that has never moved can still move.

There is a Compensation Fund, but it is narrow. Part XVI of the Act keeps a Compensation Fund for people who suffer a loss because of a licensed person's default (for example, money entrusted to a dealer that goes missing). It is paid for by dealers and investment advisers. The Act lets the Minister set the Fund's limits by statutory instrument and requires licensed persons to carry their own insurance. We could not find a published per-claim limit, so do not assume it will make you whole. It is not a guarantee against a fund simply losing value.

Zambia's unit trust market in numbers

The most recent industry breakdown the SEC has published in an annual report we could read is for 31 December 2022. Collective investment schemes held K1,690 million in assets, up 227% since 2018 and K350 million (26%) in a year. About 88% (K1,494 million) was invested locally. The number of local authorised schemes had risen to eleven.

Market share of assets, December 2022 (SEC Annual Report 2022):

The same report shows where local fund money went: term deposits 30%, government bonds 20%, real estate 20%, other collective investment schemes 10%, commercial paper 6%, listed shares 6% and other assets 8%. In other words, most Zambian fund money sits in the same kinds of instruments a cautious saver would buy, bundled and managed for you.

This list is a snapshot, not a current register. Funds open, merge and lose authorisation. Always check a fund's status today (see the checklist below) rather than relying on its presence in this table.

What happened at Madison and Laurence Paul

Two names in that table carry an asterisk in real life, and every Zambian thinking about a unit trust should know why.

Madison Asset Management Company Limited (MAMCo), manager of Madison Unit Trust, has been in the SEC's supervisory possession since 2 March 2020. The SEC appointed joint interim managers "to ascertain the state of affairs of MAMCO, safeguard the interests of the investing public and ensure compliance with the Securities Act". Its parent's results announcement published on 1 August 2025 still described MAMCo as remaining under SEC possession. It recorded that shareholders had approved, on 4 May 2023, a plan to move identified MAMCo assets into a new collective investment scheme held in trust for the creditors of its Fixed Income Fund, as a full and final settlement, and that the modalities were still being worked on.

Laurence Paul Investment Services Limited, manager of Laurence Paul Unit Trust, was taken into possession on 16 October 2020. The stated purposes included understanding "the status of funds collected from the public" and securing assets attributable to investors. The possession was lifted with effect from 10 February 2023, and the SEC's release notes that criminal processes by law-enforcement agencies were discussed at a stakeholder meeting. The release does not say what investors recovered, and neither do we.

The lesson is not that unit trusts are unsafe. The lesson is what possession means in practice. Section 11 of the Act lets the SEC freeze a manager's assets and bank accounts, run or close the business, transfer it to another operator or sell assets. That protects investors from further damage, but it can also mean years before money is released. Liquidity, not just return, is part of the risk you are taking.

The kinds of fund you will be offered

• Money market funds hold Treasury bills, short-term deposits and similar paper. They aim for stability and quick access, and are usually pitched as an alternative to a savings account. They are the lowest-risk fund type, but not risk-free: an issuer can default, and a rush of withdrawals can slow payouts.
• Fixed income or bond funds hold longer-dated government and corporate bonds. Their unit prices can fall when interest rates rise.
• Equity funds hold shares, mostly on the Lusaka Securities Exchange. Expect prices that rise and fall, and treat them as five-year-plus money.
• Balanced funds mix the above.
• Property-linked funds hold real estate, which the SEC's figures show is a large share of local fund assets. Property is slow to sell, which can slow redemptions.
• Offshore funds are sold through a Zambian representative, often priced in US dollars. Standard Chartered Zambia, for example, advertises a minimum of US$1,000 lump sum or US$200 a month and requires you to hold an account with the bank. Currency moves can work for you or against you.

Unit trust vs bank savings vs buying Treasury bills yourself

That tax row matters more than people expect. PwC's Zambia tax summary (reviewed July 2026) confirms that interest on individuals' accounts at licensed banks is exempt from tax, while withholding tax of 15% applies to most other interest, including government bond coupons. A fund that beats a savings rate on paper may not beat it once tax, insurance cover and fees are counted. Compare current bank rates on our savings accounts comparison before you decide.

How tax works on a Zambian unit trust

At the fund level, the Income Tax (Amendment) Act, No. 22 of 2024, in force from 1 January 2025, exempts the income of an approved collective investment scheme "to the extent to which the income is distributed to participants". Income a fund keeps rather than distributes is not covered by that exemption.

That is not the whole picture. ABC Asset Management says its own funds obtained withholding-tax exemption from ZRA on dividends and savings interest, but not on interest from government and corporate bonds or Treasury bills. So tax may already have been deducted inside the fund before a return is quoted to you. Zambia has no capital gains tax, according to PwC, but the treatment of distributions and redemptions in your own hands is not something we could establish from a primary source for every fund type. Ask the manager, in writing, what tax has been or will be deducted, and see our Zambia tax guide for the wider rules.

Fees: the number that quietly decides your return

Every fund charges an annual management fee, and many add trustee, custody and administration costs, all taken out before the return you see. Fees differ widely by fund, so we do not publish a "typical" figure. Here is why the difference matters, using illustrative numbers only:

Two funds each earn 14% a year before costs on a K10,000 lump sum. Fund A charges 3% a year in total costs, so you earn 11%. Fund B charges 1.5%, so you earn 12.5%.

A 1.5-percentage-point gap in fees costs more than 40% of your original investment over ten years. Run your own numbers through our compound interest calculator, or the savings calculator if you plan monthly contributions. When you ask a manager about fees, ask for the total expense ratio, the figure that combines all annual costs, not just the management fee.

How to invest, step by step

1. Confirm the scheme is authorised today. Ask the manager for the SEC authorisation of the specific scheme, not just the company's licence. The SEC's online licensee register lists dealers and investment advisers; for the scheme itself, email info@seczambia.org.zm with the fund's exact name and ask whether it is currently authorised. An honest manager will not mind you checking.
2. Get the key facts statement and the trust deed or scheme rules. Read the minimums, the fees and the redemption terms. ABC's money market fund factsheet from June 2021, for example, set a K20,000 minimum lump sum, a K500 minimum monthly contribution, a three-month minimum holding period and redemptions twice a month. Those are dated examples; your fund's terms will be different, and they are exactly the terms you need to know.
3. Check who the trustee or custodian is. It should be a separate, named institution. If nobody can tell you, stop.
4. Complete identity checks. Expect to provide identification and proof of address, much as when you open a bank account.
5. Pay into the fund's account, never a person's. Your money should go to an account in the scheme's or trustee's name.
6. Understand the cut-off time. Unit trusts deal at the next price calculated after your instruction. ABC's factsheet, for instance, says instructions received by 16:00 are traded at that day's price.
7. Keep every statement. Your statement is your record of how many units you own. Check it against your payments.

Getting your money out

Withdrawals (redemptions) are made at the unit price on the day your instruction is processed, then paid out according to the fund's rules. Delays usually come from four sources:

• A minimum holding period in the fund rules.
• Limited redemption dates, such as twice a month.
• Liquidity management. ABC's own guidance warns that heavy withdrawals can lead to "ring fencing of withdrawal instructions and managed pay-outs over time".
• Regulatory action. If the SEC revokes a scheme's authorisation, section 127 lets it direct the manager to stop issuing and redeeming units, or to wind the scheme up.

Never put money you may need at short notice (rent, school fees, an emergency fund) into a fund with long notice periods or property-heavy assets.

Red flags: walk away if you hear these

• "Guaranteed" returns. No authorised unit trust in Zambia is required to guarantee your capital or return, and the ones we reviewed expressly say they do not.
• Returns far above what Treasury bills pay. Money market funds invest in the same market; they cannot deliver dramatically more without taking dramatically more risk.
• "It's like a unit trust" or "a scheme" with no SEC authorisation. Promoting an unauthorised collective investment scheme is an offence under section 122.
• Pressure to pay today, cash-only or into a personal mobile money number.
• No named trustee or custodian. Separation of assets is the core protection; without it you are simply lending money to a company.

Frequently asked questions

Are unit trusts in Zambia regulated? Yes. Every collective investment scheme must be authorised by the Securities and Exchange Commission under Part X of the Securities Act, and its manager, trustee and custodian must each be authorised as fit and proper.

Is my unit trust covered by the K250,000 deposit insurance? No. The Deposit Insurance Scheme covers deposits at member institutions. Units in a fund are an investment, not a deposit.

What happens to my money if the fund manager collapses? The fund's assets must be held by a trustee or custodian on behalf of investors, not by the manager. That separation protects them from the manager's own creditors, but as the Madison and Laurence Paul cases show, SEC intervention can freeze access for a long time.

Can I lose money in a money market fund? It is uncommon, but yes. Issuers can default and a fixed K1 unit price can be adjusted downward. Money market funds are low-risk, not no-risk.

How much do I need to start? It depends entirely on the fund. Each manager sets its own lump-sum and monthly minimums, so ask for the current key facts statement.

Are unit trust returns taxed? The fund's distributed income is exempt at fund level from 1 January 2025, but withholding tax can still apply to bond and Treasury bill interest inside the fund. Ask the manager for its tax statement.

Sources

• Securities Act, No. 41 of 2016, as amended by Act No. 21 of 2022: sections 2, 11, 121 to 128 and 176 to 183. SEC-published consolidated text: https://www.seczambia.org.zm/wp-content/uploads/2025/08/The-Securities-Act-No.-41-of-2016-Amended-by-Act-No.-21-of-2022.pdf
• Securities and Exchange Commission, Annual Report 2022: collective investment scheme assets, market share and asset allocation, and AGM notes on Madison and Laurence Paul. https://www.seczambia.org.zm/wp-content/uploads/2025/05/2022-SEC-Annual-Report_Copy-submitted-to-MOF.pdf
• SEC, Notice of Supervisory Possession of Madison Asset Management Company Limited (7 March 2020). https://www.seczambia.org.zm/latest-news/notice-of-supervisory-possession-of-madison-asset-management-company-limited/
• Madison Financial Services Plc, FY2023 abridged financial statements, SENS announcement of 1 August 2025, Lusaka Securities Exchange. https://www.luse.co.zm/wp-content/uploads/2025/08/MFS-FY-2023-Abridged-Financial-Statements-SENS-01.08.2025.pdf
• SEC, Press release: Lifting of Supervisory Possession of Laurence Paul Investment Services (14 February 2023). https://www.seczambia.org.zm/wp-content/uploads/2025/06/PRESS-RELEASE_LIFTING-OF-THE-SUPERVISORY-POSSESSION-OF-LAURENCE-PAUL-INVESTMENT-SERVICES-002.pdf
• Income Tax (Amendment) Act, No. 22 of 2024, section 13. https://www.parliament.gov.zm/sites/default/files/documents/acts/Income%20Tax%20(Amendment)%20Act%20No.%2022%20of%202024.pdf
• Statutory Instrument No. 25 of 2024, Fees and Fines (Fee and Penalty Unit Value) (Amendment) Regulations: penalty unit of 40 ngwee.
• PwC Worldwide Tax Summaries, Zambia: individual income determination and corporate withholding taxes (both reviewed 24 July 2026). https://taxsummaries.pwc.com/zambia/individual/income-determination
• ABC Asset Management, "Understanding unit trusts" and ABC Money Market Fund Key Facts Statement (June 2021): provider statements about its own funds only. https://abcassetmanagement.com/understanding-unit-trusts/
• Standard Chartered Zambia, mutual funds page: provider's own minimums. https://www.sc.com/zm/invest/mutual-funds/

Last reviewed: September 2026. General information, not financial, tax or legal advice. Fund terms, fees and authorisation status change; confirm them with the manager and the Securities and Exchange Commission before investing.