Economy

Investment Opportunities for Retail Investors

Published

7 years ago

07/05/2019

By FSDH Research

There are now investment products in the Nigerian financial market for all Nigerians, irrespective of their income level. Opening an investment account is now easier than ever, after meeting the basic regulatory Know Your Customer (KYC) requirements.

In fact, in some cases, it could be as simple as A, B, C. Technology has made the process of transferring money into an investment account easy, simple and convenient. Since direct cash payments into investment accounts are not allowed in all cases, investors can now transfer money into their investment accounts through their phones and other convenient online platforms.

A mutual fund is an instrument that creates investment opportunities for retail investors in Nigeria. So instead of stacking your hard-earned money in a place where it does not increase in value, why not commit to a mutual fund and let your money start working for you, even when you are sleeping.

Mutual funds provide retail investors with an opportunity not only to preserve their wealth, but to grow their money. They are similar to the ‘esusu’, ‘ajo’ or ‘adashe’ systems prevalent in Nigeria where a group of people contribute monies on a regular basis to a common purse, usually managed by the leader.

After a specified period, say a week or a month, each person gets back his or her money after paying some sort of commission to the manager. Mutual funds are also similar to piggy banks, which are used to encourage savings amongst both children and adults.

However, mutual funds are better than these forms of savings because the managers of these funds invest the money paid into mutual funds accounts to generate additional income. The fund managers pool funds from various individuals and invest them in financial securities such as Nigerian Treasury Bills, Government Bonds, Commercial Papers, Real Estate and Stocks and Commodities.

In addition, mutual funds offer other benefits to the retail investor. Investors benefit from lower transaction costs. Since knowledgeable and experienced fund managers manage the fund, retail investors can sleep with both eyes closed. The fund managers make the ‘what’, ‘when’ and ‘why’ investment decisions on behalf of the investors in a bid to protect investment and earn the maximum return possible. Fund managers decide what security to invest in, when to do so and why.

From a national perspective, the monies from mutual funds could help to increase savings level in Nigeria, which is currently low compared to other countries. Investment in mutual funds is also a way to provide both short-term and long-term capital for companies and government to expand operations and improve infrastructure. This would help increase production, employment and consumption, and stimulate the economy.

Government would also be able to generate greater revenue through taxes on businesses.

In Nigeria, the Securities and Exchange Commission (SEC) regulates mutual funds operations and the professionals that are involved in them.

Most mutual funds are open-ended investment schemes: new investors can buy additional units at any time. The fund managers are also able to provide active liquidity by buying units from existing investors who want to sell units for cash.

Mutual funds offer investors an opportunity to diversify their investment portfolio. The existence of a Trustee and Custodian to a mutual fund ensures the safety of investments, as the Trustee ensures that the fund is managed in line with approved investment guidelines, while the Custodian holds the fund assets in safe custody.

The mutual fund assets in Nigeria have grown significantly in the last five years, an indication of the growing interest in this class of investment.

Data from the SEC on the Net Asset Value (NAV) of all registered mutual funds in Nigeria shows that the collective NAV grew by 328% between 18 April 2014 and 18 April 2019. This translates to a Compound Annual Growth Rate (CAGR) of 34% between this period.

Despite the impressive growth rate, FSDH Research notes that there is significant room for growth in mutual fund assets as we estimate the ratio of mutual funds to the country’s Gross Domestic Product (GDP) to be 0.57%.

FSDH Research notes, however, that mutual funds need more support than is currently available to enable potential investors to fulfil their wealth creation and developmental goals. Government, regulators and the operators in investment management need to provide mutual funds additional support. Government should intensify its efforts at improving the business environment. This will lead to job creation in the country, consequently reducing unemployment, increase savings and investable funds. Regulators could promote innovative legislation to increase investment in mutual funds and expand investment channels to increase returns on the funds invested.

The Fund Managers Association of Nigeria (FMAN) should continue to create public awareness on the benefits of mutual funds in order to generate interest from the investing public.

Economy

Nigerian Stocks Close 1.13% Higher to Remain in Bulls’ Territory

Published

17 hours ago

20/12/2025

Dipo Olowookere

By Dipo Olowookere

The local stock market firmed up by 1.13 per cent on Friday as appetite for Nigerian stocks remained strong.

Investors reacted well to the 2026 budget presentation of President Bola Tinubu to the National Assembly yesterday, especially because of the more realistic crude oil benchmark of $64 per barrel compared with the ambitious $75 per barrel for 2025. This year, prices have been between $60 and $65 per barrel.

Business Post observed profit-taking in the commodity and energy sectors as they respectively shed 0.14 per cent and 0.03 per cent.

But, bargain-hunting in the others sustained the positive run, with the consumer goods index up by 3.82 per cent.

Further, the industrial goods space appreciated by 1.46 per cent, the banking counter improved by 0.08 per cent, and the insurance industry gained 0.04 per cent.

As a result, the All-Share Index (ASI) increased by 1,694.33 points to 152,057.38 points from 150,363.05 points and the market capitalisation chalked up N1.080 trillion to finish at N96.937 trillion compared with Thursday’s closing value of N95.857 trillion.

A total of 34 shares ended on the advancers’ chart, while 24 were on the laggards’ log, representing a positive market breadth index and bullish investor sentiment.

Austin Laz gained 10.00 per cent to close at N2.42, Union Dicon also jumped 10.00 per cent to N6.60, Tantalizers increased by 9.80 per cent to N2.69, Aluminium Extrusion improved by 9.78 per cent to N12.35, and Champion Breweries grew by 9.71 per cent to N16.95.

Conversely, Sovereign Trust Insurance dipped by 7.42 per cent to N3.87, Royal Exchange lost 6.84 per cent to trade at N1.77, Omatek slipped by 6.84 per cent to N1.09, Eunisell depreciated by 5.88 per cent to N80.00, and Eterna dropped 5.63 per cent to close at N28.50.

Yesterday, traders transacted 1.5 billion units worth N21.8 billion in 25,667 deals compared with the 839.8 million units sold for N32.8 billion in 23,211 deals in the preceding session, showing a surge in the trading volume by 76.61 per cent, an uptick in the number of deals by 10.58 per cent, and a shrink in the trading value by 33.54 per cent.

Economy

FrieslandCampina, Two Others Erase N26bn from NASD OTC Bourse

Published

18 hours ago

20/12/2025

Adedapo Adesanya

By Adedapo Adesanya

Three stocks stretched the bearish run of the NASD Over-the-Counter (OTC) Securities Exchange by 1.21 per cent on Friday, December 19, with the market capitalisation giving up N26.01 billion to close at N2.121 billion compared with the N2.147 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropping 43.47 points to 3,546.41 points from 3,589.88 points.

The trio of FrieslandCampina Wamco Nigeria Plc, Central Securities Clearing System (CSCS) Plc, and NASD Plc overpowered the gains printed by four other securities.

FrieslandCampina Wamco Nigeria Plc lost N6.00 to sell at N54.00 per unit versus N60.00 per unit, NASD Plc shrank by N3.50 to N58.50 per share from N55.00 per share, and CSCS Plc depleted by N2.91 to N33.87 per unit from N36.78 per unit.

On the flip side, Air Liquide Plc gained N1.01 to close at N13.00 per share versus N11.99 per share, Golden Capital Plc appreciated by 70 Kobo to N7.68 per unit from N6.98 per unit, Geo-Fluids Plc added 39 Kobo to sell at N5.50 per share versus N5.11 per share, and IPWA Plc rose by 8 Kobo to 85 Kobo per unit from 77 Kobo per unit.

During the trading day, market participants traded 1.9 million securities versus the previous day’s 30.5 million securities showing a decline of 49.3 per cent. The value of trades went down by 64.3 per cent to N80.3 million from N225.1 million, but the number of deals jumped by 32.1 per cent to 37 deals from 28 deals.

Infrastructure Credit Guarantee Company (InfraCredit) Plc finished the session as the most active stock by value on a year-to-date basis with 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units traded for N4.9 billion.

The most active stock by volume on a year-to-date basis was still InfraCredit Plc with 5.8 billion units worth N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.7 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.

Economy

Naira Crashes to N1,464/$1 at Official Market, N1,485/$1 at Black Market

Published

21 hours ago

20/12/2025

Adedapo Adesanya

By Adedapo Adesanya

It was not a good day for the Nigerian Naira at the two major foreign exchange (FX) market on Friday as it suffered a heavy loss against the United States Dollar at the close of transactions.

In the black market segment, the Naira weakened against its American counterpart yesterday by N10 to quote at N1,485/$1, in contrast to the N1,475/$1 it was traded a day earlier, and at the GTBank forex counter, it depreciated by N2 to settle at N1,467/$1 versus Thursday’s closing price of N1,465/$1.

In the Nigerian Autonomous Foreign Exchange Market (NAFEX) window, which is also the official market, the nation’s legal tender crashed against the greenback by N6.65 or 0.46 per cent to close at N1,464.49/$1 compared with the preceding session’s rate of N1,457.84/$1.

In the same vein, the local currency tumbled against the Euro in the spot market by N2.25 to sell for N1,714.63/€1 compared with the previous day’s N1,712.38/€1, but appreciated against the Pound Sterling by 73 Kobo to finish at N1,957.30/£1 compared with the N1,958.03/£1 it was traded in the preceding session.

The market continues to face seasonal pressure even as the Central Bank of Nigeria (CBN) is still conducting FX intervention sales, which have significantly reduced but not remove pressure from the Naira. Also, there seems to be reduced supply from exporters, foreign portfolio investors and non-bank corporate inflows.

President Bola Tinubu on Friday presented the government’s N58.47 trillion budget plan aimed at consolidating economic reforms and boosting growth.

The budget is based on a projected crude oil price of $64.85 a barrel and includes a target oil output of 1.84 million barrels a day. It also projects an exchange rate of N1,400 to the Dollar.

President Tinubu said inflation had plunged to an annual rate of 14.45 per cent in November from 24.23 per cent in March, while foreign reserves had surged to a seven-year high of $47 billion.

Meanwhile, the cryptocurrency market was dominated by the bulls but it continues to face increased pressure after million in liquidations in previous session over accelerating declines, with Dogecoin (DOGE) recovering 4.2 per cent to trade at $0.1309.

Further, Ripple (XRP) appreciated by 3.9 per cent to $1.90, Cardano (ADA) rose by 3.5 per cent to $0.3728, Solana (SOL) jumped by 3.4 per cent to $126.23, Ethereum (ETH) climbed by 2.9 per cent to $2,982.42, Binance Coin (BNB) gained 2.0 per cent to sell for $853.06, Bitcoin (BTC) improved by 1.7 per cent to $88,281.21, and Litecoin (LTC) soared by 1.2 per cent to $76.50, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.