By Quantitative Financial Analytics
In one of our earlier analysis, we did warn that unless FBN Capital Asset Management found a way to stem the trend in redemptions taking place in its flagship fund, the FBN Money Market Fund, that the fund manager would lose their position as the second largest mutual fund manager in Nigeria.
True to our prediction, that has just happened.
Analysts at Quantitative Financial Analytics have determined that going by the data just released by the Security and Exchange Commission (SEC), FBN Capital Asset Management is now in the third position in the ranking of mutual fund managers by AUM.
The second position has been taken over by FSDH Asset Management.
FBN Capital Asset Management lost that enviable position not due to lack of performance as our analysis reveals that all the funds under its management made profits in 2016 except FBN Fixed Income Fund.
Then and Now
Per available records, on December 31, 2015, FBN Capital Asset Management was solidly at the second position with 30.83% of the total mutual funds AUM under its management, only 0.41% shy of Stanbic IBTC Asset Management’s 31.24% AUM share as the industry leader and 17.8% more than the 13.03% AUM share held by FSDH Asset Management in the 3rd place. That was then, this is now.
As at December 30th 2016, FBN Capital Asset Management controlled 14.43% of mutual funds AUM, down 16.6% from previous year.
FSDH Asset Management now holds 15.52%, up 2.49% when compared with last year’s.
The positional loss was due to redemptions from FBN Money Market fund which recorded an estimated N48 billion in net outflow.
Unfortunately, the three new funds launched by the fund manager (FBN Nigeria Smart Beta Fund, FBN Nigeria Eurobond USD Fund Retail and Institutional) could not change the dynamics.
On the other hand, FSDH Asset Management assumed the second position because of a combination of marginal performance and an estimated net inflow of about N120 million.
Blame it on Yield Hungry Investors
As noted in our earlier analysis, of the three largest money market mutual funds (FBN, ARM and Stanbic IBTC), FBN money market fund boasts of the lowest yield.
One thing about yield hunting Nigerian investors is that they love their yield and they go after it wherever it may be found.
Around October 2015, when FBN Money market fund offered the highest yield among money market funds and instruments, it became the largest fund in the industry by value. It was then valued at about N54 billion, but as its yield took a dive, so did its value and that of the Fund manager.
Diversification and Vulnerabilities
FBN Capital Asset Management currently manages 6 mutual funds which together represent about 14.4% of total mutual funds’ assets. 10.9% of the 14.4% is in the money market fund while FSDH Asset Management has 3 mutual funds whose total value represent 15.5% of total mutual fund asset. 13.8% of the 15.5% is in the UPDC Real Estate Investment fund. These two fund managers are therefore very vulnerable to the fortunes or otherwise of the single funds that make up a considerable portion of their AUM.
Reversal in Sight
The “tug of war” between FBN Capital Asset Management and FSDH Asset Management is not new. History has it that on March 27th 2015, FSDH was at the second position with 18.61% of mutual funds’ Assets while FBN held the 3rd position with 17.58% but by April 30th 2015, FBN had taken the second position.
It will not be a thing of surprise if FBN Capital Asset Management regains its second position in no distant time. We are watching.
