Mutual Funds Asset Value May Hit N400b Before Year End

By Quantitative Financial Analytics

Nigerian Mutual Funds assets have grown by limps and bounds for the last couple of years but it appears that that growth has accelerated further so far in 2017.

According to available information released by the Securities and Exchange Commission (SEC), the total asset value of mutual funds in Nigeria stood at N354 billion as at September 30, 2017.

The Nigerian mutual funds had opened the year with a total asset value of N225 billion, only to increase it by about 57 percent to its current value of N354 billion.

The major contributors to the growth are additional investor contributions which amounted to an estimated N119 billion, and N11.9 billion of performance gains.

As has been the pattern, most of the additional investments went to money market funds while much of the performance return came from equity funds.

Another contributor to the growth is the additional 13 funds that were launched within the year. Among the launches is Nigeria’s most expensive mutual fund, EDC Money market fund, which requires a minimum of N1m to buy a share.

The size dynamics of the Nigerian mutual fund industry remains intact inspite of the new introductions.

Stanbic IBTC Money market fund retains its position as the largest mutual fund by asset followed by FBN money market fund and then UPDC Real Estate Investment Fund. PACAM fixed income fund is however the smallest mutual fund by asset.

Fund manager ranking remains the same as well with Stanbic IBTC Asset Management occupying the enviable position as the largest fund manager with 45.01 percent of total mutual fund assets followed by FBN Capital Asset Management with 16.53 percent and then FSDH Asset Management company with 9.74 percent. Lead Asset Management Ltd manages the least mutual funds by asset value.

With the rate at which Nigerian mutual funds are growing their assets and if the macro economic conditions continue to improve, it will not be a surprise to many, if the assets hit the N400 billion mark by year end.

Recently, however, the yield curves have started sloping downwards and this may affect the demand for and performance of money market funds and invariably affect the asset growth of those funds.

With the IMF warning that the debt to GDP ratio of Nigeria is becoming something of concern, investors may begin to demand increased yield which will in turn funnel into money market funds.