The asset managed by Nigerian mutual funds reached an all-time-high in the week ended March 22, 2019, according to the Securities and Exchange Commission data analysed by BusinessDay.
Since inception, the Asset Under Management (AUM) of Nigerian mutual funds appreciated by N613.76 billion from N 77.67 billion Net Asset Value (NAV) reported for the week ended August 19, 2011, to N691.43 billion reported for the week ended March22, 2019.
Dayo Obisan, president, Fund Managers Association of Nigeria (FMAN), said the performance was a reflection of products creation and increased effort in distribution.
“Within the asset management space, more products have been created and a lot of Fund managers are into distribution, in terms of marketing,” Obisan told BusinessDay.
A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets.
Paul Uzum, managing director, Halo Nigeria Capital Ltd, said despite the growth in AUM, the level of participation by investors in mutual fund is still quite low
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“As such, you don’t see much transaction on mutual funds at the exchange. This may be because people are very careful in giving out their money to other people to manage for them,” Uzum said.
The eight-year data available on the website of the Securities and Exchange Commission (SEC) revealed that most of the fresh funds flowed into the money market and fixed income mutual funds as double-digit yields in debt securities excited investors to invest less in volatile funds like equity.
Analysis of the figures by the industry regulator revealed that money market funds raked the highest share of the entire market with N522.82 billion NAV.
Money market funds as a percentage of total mutual funds had a significant increase by N517.45 billion from N5.37 billion in February 2012 when the first asset class categorisation was done to N522.82 billion at the week ended March 22, 2019.
On the reasons why money market fund reported the highest AUM in the review period, an analyst from Alpha Morgan Capital Managers Limited, who asked not to be quoted, said it attracts the highest investors because it is risk-free.
“That is, the return will always be positive and it is short-term. Investors are sure that they will get their return at the end of the day, no matter how small it is,” the analyst said.
Money market funds are open-ended mutual funds that invest in short-term debt securities such as treasury bills, certificates of deposit, and commercial paper.
The Alpha Morgan investment analyst explained that “smaller investors can also participate in those funds and enjoy full benefit the fund managers are able to provide for them”.
According to him, that is the reason more people are inclined to investing in money market funds as compared to other mutual funds.
Fixed income funds which have 16 funds under its asset class, four funds less than those in money market, controlled 9.52 percent of the entire market with NAV of N65.82 billion.
Surprisingly, the real estate funds with three funds under its asset class, the least under any asset classes listed on the security exchange, stood at the third position, with N44.57 billion NAV, which accounted for 6.45 percent of the total asset managed in the market.
Mixed funds with 3.59 percent share of the mutual funds’ asset under management made the list of the top four, whereas bond funds, equity funds and ethical funds occupied the bottom of the pyramid with 2.39 percent, 1.69 percent and 0.75 percent market share, respectively.
A further analysis of the data by the SEC for the week-ended March 22, 2019 revealed that Stanbic IBTC Money Market Fund, managed by Stanbic IBTC Asset Management Limited, reported the highest share of the market with N251.96 billion which represented 36.44 percent of the entire asset under management by the listed mutual funds in the review period.
This was followed by FBN Money Market Fund managed by FBN Capital Asset Management Limited. Although it was N105.79 billion less than the former, its total asset under management stood N146.17 billion.
Also on the top five funds were ARM Money Market Fund, UPDC Real Estate Investment Fund, and Stanbic IBTC Dollar Fund as they reported asset under management of N52.25 billion, N32.38 billion, and N26.35 billion, respectively.
Endurance Okafor
