Business

Mutual funds hit N1.4trn in 2020

The total market value of investment in the mutual fund segment stood at N1.4 trillion as at December 2020, according to a document obtained from the Nigerian Exchange Limited (NGX).

 

The Group Chief Executive Officer, NGX Group, Mr. Oscar Onyema, who stated this in an annual report, noted that NGX mutual fund market gained traction as the total number of listed mutual fundincreased to 52 following the listing of the ARM Eurobond fund and ARM Fixed Income fund.

 

“At the close of the year, the net asset value of listed mutual funds stood at N1.14 trillion,” he said.

 

Speaking via zoom recently, Head of Research at Coronation Asset Management, Guy Czartoryski, noted that the mutual funds wass growing at a fast pace due to cur-  rent low interest rates.

 

He noted that the total assets of mutual funds in four years had doubled up to about 305 per cent in nominal terms adding that it grew by 22 per cent in inflation adjusted terms and 42 per cent in nominal terms on the average compound annual growth rate (CAGR).

 

“We think this segment will challenge pension funds for sheer size in a few years to come. Although, we think that this will be a matter of time before it becomes large as it is a good form of investment and so investors will load funds in that segment but the baseline of regulation needs to be strong.

“Secondly, in order for this segment to grow, there has to be a new level of risk management and education as to how investors can diversify assets across assets classes.

 

Although the Securities and Exchange Commission (SEC) have been doing a good job in that regard but we need improved information on fund  performance,”

 

Czartoryski said. When quizzed on the guarantee of returns in the mutual funds segment, he noted that guarantee comes with a price while adding that the structure of mutual funds is different from that of banks due to their collaboration with the Nigeria Deposit Insurance Corporation (NDIC) and other regulatory bodies.

 

The Managing Director, Coronation Asset Management, Aigbovbioise Aig-Imoukhuede, said the effects of COVID-19 on the economy warranted the research based company to help investors understand the mutual funds segment. “Opportunities abound in the mutual funds segment.

 

We need to have an investing attitude as well as savings culture because it is necessary and key to the development of the Nigerian economy,” Aig-Imoukhuede said.

 

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