Treasury Bills are short-term government securities issued by the Bank of Uganda with maturities of 91, 182, or 364 days, sold at a discount and redeemed at face value, where the difference represents the investor’s profit; this profit is subject to a 20% withholding tax.
Next week Bank of Uganda will be Auctioning off Treasury Bills and many people have asked me why I don’t aggressively write about T-Bills as much as I do for Bonds. It’s because Unit Trust Funds will serve you better at many fronts than T-Bills for Retail Investors.
The Recent Auction in the Treasury bill Market is seeing the yelds reaching as high as 15% for a 364 days bill and this is making many of us re-assess to invest our money in a liquid Unit trusts or Invest in the Treasury bills especially those of 364 days?
However, if liquidity and access for your money at any time you want is top priority then a Unit trust is way much better than any Treasury bill. So if you are reading this and you just want to pack some money in an investment for just a few months but you might need anytime soon, or when you don’t know when you might need it but you know at one time you will need it, then The Unit trust model is a superior choice.
But what of those with direct intentions of wanting to invest for just 1 year, you are in October 2025 and you will need this money holistically in October 2026 and you are willing to play the time game, which options is best for you?
The person who bought a treasury bill of face value of 10 million paid a cost of UGX 8,679,900 and made a gross profit of UGX 1,320,100. with a 20% with holding tax on treasury bills, the tax paid was UGX 264,020 on that investment and made a total income of UGX 1,056,080. Total Value at end of the year UGX 9,735,980.
The person who bought a treasury bill of face value of 50 million paid a cost of UGX43,399,500 and made a gross profit of UGX 6,600,500. with a 20% with holding tax on treasury bills, the tax paid was UGX 1,320,100 on that investment and made a total income of UGX 5,280,400. Total Value at end of the year UGX 48,679,900.
So are these people better packing their investments in treasury bills for 1 year or they are better off leaving it in the Unit trusts for 1 year knowing there is no tax on Unit trusts but considering a Management fee.
Unit Trusts returning 11.8% on average annualized in 1 year. Some Unit Trusts right now are returning above 12.5% and some Fund Managers like Sanlam, SBG and Cornerstone have maintained returned of over 13%+ in the last 10 months.
If your Unit trust in the coming year averages just around 11.8% and you invest just UGX 8.672 million at the beginning with a compounding of your income for 12 months, then by the end of 1 year, you will have an average of UGX 1,024,228 profits which is less than the person who invested in the treasury bill for the same period (both of you investing just invested the same amount of UGX 8.672 Million).
Like I said above this works only if you are packing your investment for a full 1 year and willing to hold for that period but if you might need money in 3 months, 6 months, Unit trusts are the most superior product for you.
Right away, if you are to invest just for 3 months or 6 months, you are better off in a Unit trust as they are all are averaging around 11.5% per month annualized after management fees yet the treasury bills of 182 and 91 days are averaging 10.05% and 9.17% respectively after tax making the Unit trusts much better option.
“The returns in the Treasury Bonds are actual, they are based off the Auction that took place on September 24, 2025 while the return on the Unit Trust are estimated”.
