Fund managers in the Nigerian capital market are shirking equities bets, a move which became worse as stock investors lost about N2.1trillion year-to-date (Ytd).
A balanced fund combines a stock component, a bond component and sometimes, a money market component in a single portfolio.
Generally, these hybrid funds stick to a relatively fixed mix of stocks and bonds which reflects either a moderate (higher equity component) or conservative (higher fixed-income component) orientation.
BusinessDay checks on Fund Managers monthly investment schedule for the third-quarter (Q3) to September 2015 shows a huge shift away from equities, in favour of the money market.
United Capital Asset Management Limited, the fund managers of United Capital Balanced Fund, invested 14.85percent of the fund in equities, 17.93percent in fixed income securities and 67.06 percent in money market instruments.
Developments in the international oil market and its spillover on the foreign reserve and FX market of Africa’s biggest economy is a major source of concern to foreign investors who are major buyers of Nigeria’s equities as they continue to tread cautiously at Custom Street.
The monthly foreign portfolio investment (FPI) transactions at the nation’s bourse decreased to N54.20 billion (about $28 million) in October 2015, from N69.33 billion (about $35 million) at the end of September 2015; representing a decrease of 21.82percent.
Despite attractive valuations which recent sell-off portends for bargain hunters, investor sell-offs continue to dominate equities at the local bourse, with value loss and Year-to-Date (Ytd) returns in excess of N2.1trillion and minus 23percent respectively.
Stanbic IBTC Asset Management Limited, the fund managers of Stanbic IBTC Balanced Fund, invested 56.98percent of the fund in money market instruments, 38.58 percent in equities and 3.49 percent in fixed income securities.
Also, 87.46 percent of Indo Nigeria Unit Trust Fund, managed by Sterling Capital Market Limited was invested in the money market, while 12.51 percent was placed in equities.
The value of listed Nigerian equities tracked by market capitalisation declined from record highs of N11.237 trillion as at January 5, 2015 to N9.124trillion as at trading week to Friday December 18, 2015.
The Nigerian Stock Exchange (NSE) All Share Index (ASI) which tracks the performance of listed stocks on the bourse, retreated from a high of 33,943.29 points as at January 5, 2015 to 26,537.36 points before the Christmas break.
Amid this development, analysts expect to see further low key activities, as investors wind down and the local bourse closes for the Christmas and New Year holidays
FBN Capital Limited, the fund managers of FBN Heritage Fund, invested 46.12 percent of the fund in the money market, 29.39 percent in equities; and 23.68percent in fixed income.
“Despite attractive rock-bottom prices, with technical justification for position taking, equities continue to hemorrhage as sentiments remain weak across board. We think the bearish outlook will persist this week”, said research analysts at Lagos-based United Capital plc.
Further checks on the fund managers monthly investment schedule shows that 29.97 percent of DV Balanced Fund, managed Vetiva Fund Managers was invested in equities, while 31.12 percent was invested in fixed income and 37.51 percent in money market instruments.
