Unit trusts offer stability amid global market uncertainty

Amid ongoing global geopolitical and economic uncertainty, and resulting market volatility - including recent spillovers into regional equity markets - Sri Lanka’s unit trust industry continues to underscore the importance of disciplined investing. While recent market conditions have led to a moderation in fund inflows, industry participants highlight that such short-term movements often mirror prevailing market conditions and do not detract from the long-term value of staying invested.

Unit trusts, by design, provide investors with diversified exposure across asset classes, managed by experienced professionals within a regulated framework. This structure enables investors to navigate periods of uncertainty more effectively, reducing the risks associated with concentrated or short-term investment decisions.

It is important to note that unit trusts can offer a more balanced approach to investing during periods of uncertainty through their diversified portfolios, which can help cushion equity market movements, thus enabling investors to maintain their investments whilst mitigating concentration risk.

Importantly, market volatility can prompt reactive behaviour; however, historical trends suggest that investors who remain committed to their investment strategies are better positioned to benefit from eventual market recoveries. In this context, unit trusts continue to serve as a reliable vehicle for both capital preservation and long-term wealth creation. In contrast to reactive, short-term investment decisions often observed during periods of market stress, unit trusts are structured to maintain strategic asset allocation and risk management discipline.

Commenting on the current environment, President of the Unit Trust Association of Sri Lanka (UTASL) and Director/CEO of Senfin Asset Management, Jeevan Sukumaran, noted: “Periods of uncertainty can understandably influence investor behaviour, particularly in the short term. However, it is important to recognise that market fluctuations are inherent to investing. Unit trusts are structured to help investors navigate these cycles through diversification, disciplined asset allocation and active professional management.”

He further reiterated: “While near-term market conditions may remain subdued, it is important to note that the industry has demonstrated resilience in the recent past, with assets under management (AUM) more than doubling following the economic crisis and surpassing the Rs. 600 Bn mark in 2025, delivering strong returns to investors over the period. Therefore, we encourage investors to remain focused on their long-term financial goals as maintaining a disciplined investment approach is key to achieving sustainable outcomes over time.”

As global conditions evolve, the Association remains committed to supporting investors through greater awareness, transparency and access to well-managed investment solutions - in particular, showing investors that unit trusts remain a practical and resilient tool for investors seeking stability, income and long-term capital appreciation within a professionally managed and regulated framework.

The UTASL is the representative body for the country’s licensed fund management companies, dedicated to upholding the highest standards of professionalism, integrity and transparency across the industry. Consisting of 16 member companies regulated by the Securities and Exchange Commission of Sri Lanka (SEC), the UTASL aims to popularise unit trusts and encourage Sri Lankans to prioritise long-term and professionally guided investing, in addition to short-term savings, whilst contributing to national economic growth. For more information on unit trusts and to connect with management companies, visit www.utasl.lk.

Source: Adaderana