Nigeria’s real estate fund, one of the seven mutual fund collective investment vehicles regulated by the Securities and Exchange Commission (SEC), has beat its industry peers to post the highest jump in asset growth year-to-date.
The asset managed by the property funds soared 20.18 percent to N50.86 billion as of August 20 from N42.32 billion at the beginning of the year.
The net asset value (NAV) of the real estate funds added N8.54 billion in the review period, topping the gainers’ chart after bond and equity funds; the only mutual fund instruments that reported growth in their asset.
Real estate, bonds, fixed income, equity, money market, mixed and ethical funds are all types of Mutual funds.
A mutual fund is a professionally managed investment scheme, usually run by an asset management firm that pools funds from a group of people and invests their money in securities such as bonds, short-term debt and stocks.
A real estate fund is an investment vehicle that pools resources together to invest in real estate, therefore allowing individual investors to partake in the benefits of the underlying properties.
“Real Estate Fund is an investment vehicle that can be used to address Nigeria’s housing shortage and encourage economic activity in the real estate sector; FSDH Research, a subsidiary of the FSDH Group explains.
Read also: ‘Technology, marketing, keys to unlocking sales in real estates’
Analysis of SEC data revealed why the real estate funds beat its peers to record the most asst growth in the review period. The number of funds in the real estate basket grew from three to four. On January 22, the Nigerian Real Estate Investment Trust fund came on board to team up with the already existing SFS Real Estate Investment Trust Fund, Union Homes REITS and UPDC Real Estate Investment Fund.
The listing of the Nigerian Real Estate Investment Trust fund added N7.4 million to the asset managed by the investment vehicle.
Accounting for 61.64 percent of the entire asset managed by the real estate fund, the N1 billion net asset growth reported by UPDC Real Estate Investment Fund helped to boost the entire basket to record the highest asset among its peers.
In search for high yields amid Nigeria’s low-interest-rate environment, investors are increasing their appetite for real estate funds due to its relatively high return on investment, and fund managers are also creating new funds, according to a Lagos-based analyst.
Despite accounting for the largest share of the entire asset in the Nigerian mutual fund industry, the money market and fixed-income funds shed the most asset in the review period. While both funds accounted for 39.58 percent and 34.19 percent, respectively of the total N1.27 trillion managed by the entire industry, they shed N227.11 billion and N3.26 billion.
This was one of the drivers of the 14.77 percent plunge in the entire asset managed by the mutual fund industry in Africa’s largest economy.
The industry shed N218.84 billion in the review period from N1.49 trillion as of January 8 to N1.27 trillion as of August 20.
