In the past 12 months, the N48.15 billion growth witnessed in the asset value of mutual funds or Collective Investment Scheme (CIS) in Nigeria was driven largely by asset growth in money market fund and real estate fund.
Currently, the active collective investment vehicles that are regulated by the Securities and Exchange Commission (SEC) are equity-based fund, money market fund, bond fund, real estate fund, balanced-based fund, ethical fund, umbrella fund, and exchange-traded fund (ETF).
While the asset value of these funds grew from N107.45 billion as at January 25, 2013 to N155.642 billion as at January 31, 2014, asset value of money market fund grew from N15.075 billion to N30.713 billion, and real estate fund recorded remarkable growth from N15.922 billion to N43.382 billion within the same period.
Money market funds invest in short-term (less than one year to maturity) corporate and government debt securities such as treasury bills, guaranteed commercial papers, bankers’ acceptances, and certificate of deposits.
Currently, funds that make up the basket of money market fund are StanbicIBTC money market fund, FBN money market fund, UBA money market fund, and ARM money market fund.
Also, the number of funds in the real estate fund grew from two to three, which are Skye shelter fund, Union Homes REITs, and UPDC Real Estate Investment Trusts.
Recent regulatory push for investors to approach the securities markets through mutual fund results from its advantages compared to direct investing in individual securities.
Our trend watch also shows that investors in equity-based funds had over N4 billion eroded from the asset value of their mutual funds. Asset value of equity-based funds declined from N50.384 billion on January 25, 2013 to N46.144 billion as at January 31, 2014.
Equity funds, as the name implies, invest primarily in equities of listed companies.
The equity-based funds that had their value eroded are Stanbic IBTC Nigerian Equity Fund, ARM Discovery Fund, Coral Growth Fund, Nigeria International Growth Fund, Legacy Fund, IMB Energy Master Fund, Frontier Fund, Denham Management Millennium Fund, Paramount Equity Fund, UBA Equity Fund, ARM Aggressive Growth Fund, ACAP Canary Growth Fund, Anchor Fund, Bedrock Fund, Zenith Equity Fund, Afrinvest Equity Fund, BGL Nubian Fund, and SIM Capital Alliance Fund.
“The goal for mutual funds is to create a platform for all kinds of investors to have access to markets, no matter how small or large the funds you have, as well as diversify your funds, thereby helping you reduce risk,” said investment analysts at FBN Capital.
While also looking at the performance of the bond fund, our check showed that its asset value grew from N12.143 billion to N15.479 billion. Fixed income fund invests in debt securities like bonds, debentures or corporate preferred shares that pay regular dividends.
The funds in the bond fund are Stanbic IBTC Bond Fund, UBA Bond Fund, Nigeria International Debt Fund, BGL Sapphire Fund, Coral Income Fund, Kakawa Guaranteed Income Fund, Zenith Income Fund, FBN Fixed Income Fund, and Stanbic IBTC Guaranteed Fund.
The asset value of another mutual fund, balanced-based fund, grew from N6.837 billion to N10.133 billion. The funds that make up this basket are Women Investment Fund, UBA Balanced Fund, Union Trustees Mixed Fund, FBN Heritage Fund, Nigeria Global Investment Fund, Stanbic IBTC Balanced Fund, Nigeria Energy Sector Fund, and Indo Nigeria Unit Trust Fund.
Also for the umbrella fund, its asset value rose to N2.523 billion from N2.301 billion, while exchange-traded fund (ETF) asset value dropped from N381.9 million to N297.9 million in the review 12-month period.
Funds under the umbrella fund are Stanbic IBTC Aggressive Fund, Stanbic IBTC Absolute Fund, and Stanbic IBTC Conservative Fund, while New Gold ETF is the only fund in the exchange-traded fund.
Investors staking their money in related securities in mutual funds have access to increased diversification among available instruments, daily liquidity, service and convenience, regulatory oversight, ease of comparison, and professional investment management. They are also able to participate in investments that may be available only to larger investors.
By: Iheanyi Nwachukwu
