Unit Trusts vs Treasury Bills in Uganda – Which Is Better for You?
When it comes to safe and reliable investments in Uganda, two options often come up: unit trusts and treasury bills. Both are regulated, both are accessible with relatively low amounts, and both are designed to help you grow your money with minimal risk. But which one is right for you? Let’s break it down.
What Are Treasury Bills?
-
Short-term government securities issued by the Bank of Uganda.
-
Maturities: 91 days, 182 days, or 364 days.
-
Bought at a discount and redeemed at face value at maturity.
-
Example: Pay UGX 900,000 for a bill with a face value of UGX 1,000,000 → Earn UGX 100,000 profit at maturity.
-
Best for: Short-term savers who want predictable returns.
What Are Unit Trusts?
-
Collective investment schemes regulated by the Capital Markets Authority (CMA).
-
Pool money from multiple investors to buy a diversified portfolio (money market instruments, bonds, equities).
-
Managed by professional fund managers (e.g., Sanlam, UAP Old Mutual, ICEA Lion, Xeno).
-
Example: You invest UGX 500,000 in a money market fund. The fund invests in treasury bills, bonds, and deposits. Your returns are shared with other investors.
-
Best for: People who want convenience, diversification, and professional management.
Unit Trusts vs Treasury Bills – Key Differences
| Feature | Treasury Bills | Unit Trusts |
|---|---|---|
| Issuer | Government of Uganda (via Bank of Uganda) | Licensed fund managers (CMA regulated) |
| Tenor | 91, 182, 364 days | Flexible – you can withdraw anytime (money market) |
| Returns | Discount → Face value at maturity | Variable returns based on fund performance |
| Liquidity | Locked until maturity | Higher – you can redeem anytime |
| Management | DIY via commercial banks | Professional management |
| Minimum Investment | UGX 100,000 | As low as UGX 10,000 (some funds) |
Which Should You Choose?
-
Choose Treasury Bills if:
-
You want a guaranteed, fixed return.
-
You’re saving for a short-term need (school fees, business cash flow).
-
You’re comfortable applying through a bank and waiting until maturity.
-
-
Choose Unit Trusts if:
-
You want flexibility and the option to withdraw anytime.
-
You prefer professional fund managers to handle your investments.
-
You want exposure to a mix of assets (not just government securities).
-
Tax Considerations
-
Treasury Bills: Profit is subject to 20% withholding tax.
-
Unit Trusts: Returns are also taxed, but money market funds often quote net-of-tax yields.
Final Thoughts
Both unit trusts and treasury bills are safe, regulated, and accessible investments in Uganda. The choice depends on your goals:
-
Treasury bills are best for short-term, predictable returns.
-
Unit trusts offer flexibility, diversification, and professional management.
Stay updated with investment insights, auction dates, and performance trends:
FAQs
1. Are unit trusts safer than treasury bills in Uganda?
Treasury bills are backed by the government and are the safest. Unit trusts are also safe but depend on the fund manager’s performance.
2. Which pays more — unit trusts or treasury bills?
It depends. Treasury bills have fixed rates, while unit trust returns vary with the market.
3. Can I invest in both?
Yes. Many investors use treasury bills for short-term goals and unit trusts for flexibility.
4. What is the minimum amount for each?
UGX 100,000 for treasury bills, as low as UGX 10,000 for unit trusts.
5. Which is better for long-term investors?
Unit trusts are better because of flexibility and diversification, while treasury bills are more for short-term savings.