Bond funds are the best performer among other collective investment schemes, with 68 percent jump in portfolio value since January triggered by strong investor appetite for low risk securities.
This asset class appreciated N9.9 billion to N24.5 billion for the week ending to August 2, from N14.6 billion as at January 4, according to latest mutual funds data published by Securities and Exchange Commission (SEC).
The steady increase in total AUM which is majorly driven by demand for less risky instruments such as bond funds, money market funds and fixed income funds portrays the conservative nature of foreign and local investors packing their cash to Nigerian mutual funds.
Total asset under management
(AUM) of Nigeria’s 84 registered mutual funds trended upwards to N798 billion, up 24 percent year to date, with annualized return of over 40 percent higher than the current inflation figure of 11.08 percent.
Fund managers in recent times have been aggressive in marketing their debt and money market funds even now when equities are red, another contributory factor to the positive returns delivered by low risk collective investment schemes, analysts say.
Moreover, growing investment consciousness of Nigerian populace coupled with attractive products introduced by fund managers has equally bolstered mutual fund market. On year-to-date basis, fixed income and money market funds, which account for a combined 79 percent share, took the second and third spot, with AUM up 50 and 25 percent respectively.
These three less risky funds were trailed by real estate funds (4.65%), mixed funds (-3.3%), with equitybased funds bottoming with 10.9 percent losses since January.
Nigerian stocks are one of the world’s worst performing equities with year losses heading to 15 percent, and the rout might persist until fiscal authorities comes out with bold policy reforms to spur investor sentiment.
The local debt market is currently on a bearish note as market participants are responding to the increasing selloffs by foreign investors in the Treasury bill market.
Yields on 10-year benchmark government bond and one of the most sensitive to market trends remained almost unchanged at 14.2 percent on Thursday. Analysts say selloffs in the market are largely driven by weakening global economic fundamentals and recessionary fears. There are currently nine bond funds registered with SEC, in which United Capital Euro Bond Fund managed by United Capital Asset Mgt Limited holds the highest share of 44 percent.
