Economy

Investors Snub Equity Mutual Funds Despite Stellar Performance

Published

8 years ago

16/03/2018

By Quantitative Financial Analytics

The year 2017 will go down the annals of financial history in Nigeria as the year that mutual funds visited investors with all manner of blessedness.

On average, equity-based funds returned 29.03 percent with the likes of ARM Aggressive fund retuning 58.06 percent, Legacy Equity Fund, 53.74 percent, Coral Growth Fund, 52.79 percent and ACAP Canary Growth Fund recording the lowest performance among equity funds with a whopping 16.57 percent.

In the same likeness, ETFs which are predominantly equity based, returned 38.78 percent on average, with Vetiva Banking ETF recording 50.25 percent, New Gold ETF, 47.87 percent and Vetiva Griffin 30 ETF, 45.98 percent.

All the Equity based funds and ETFs made gains of not less than 16 percent in 2017.

Surprisingly, a flow analysis carried out by Quantitative Financial Analytics’ analysts indicate that investors did not take advantage of the equity market performance. Cash flow analysis is a way of measuring investors’ attraction or appetite for mutual funds.

While every category of mutual funds recorded net inflows in 2017, only the equity fund and ethical fund categories recorded net out flow.

In 2017, the total estimated inflow to the industry stood at approximately N249 billion while outflows amounted to N63 billion leaving a net inflow of N186 billion.

As usual, money market funds attracted the greatest inflow in the amount of N221 billion but suffered outflows amounting to N40 billion, resulting in a net inflow of N181 billion.

Bond or fixed income funds attracted inflows of N18 billion while suffering outflows of N11 billion, leaving it with net inflow of N7 billion. The other categories of Real estate funds, ETFs, and Balanced funds, all ended the year with net inflows but the story is different for equity and ethical funds.

In the year under consideration, equity funds received N4 billion of inflows but suffered outflows in the sum of N8 billion, amounting to a net outflow of N4 billion.

As at March 2, 2018, the total asset of mutual funds in Nigeria was N512 billion out of which only 6.5 percent (N33 billion) is in equity funds.

Though the trend does not seem to be reversing so far in 2018, there appears to be some attraction to equity funds.

Within the first two months of 2018, the industry attracted a total of N98 billion inflows with N14 billion outflows. While N89 billion of those went to money market funds which suffered N10 billion of outflows (net-flow N79 billion), equity funds attracted N2 billion inflows and suffered N0.9 billion in outflows leaving that category of funds with positive net flow.

The reason for the lack of appetite or likeness for equity mutual funds could be because investors are still reeling from the losses made from the market crash of 2009, but for how long, one may ask.

Another reason could be the risk disposition of investors. While money market funds may not be yielding as much in bull markets, they tend to be less risky than equity funds and as such attractive to risk averse investors.

Yet another reason could be lack of data and information. In the Nigerian mutual fund industry, it is easy to get information on money market yields but not so easy to get such information on other categories of mutual funds.

This issue is even exacerbated by some blogs or articles on fund performance being thrown out there. Some of those blog/articles tend to overstate the performance of money market funds while understating that of other categories of funds because such blogs/articles ignore the effects of cash flows on performance calculations.

By lumping cashflows into the fund, they run the risk of interpreting changes in funds’ net asset value as due solely to performance. This erroneous interpretation tends to punish funds that suffer net outflows while rewarding those with net inflows.

It is important however, to note that past performance does not guarantee future performance so much such that the stellar performance of equity funds in 2017 does not indicate that they will perform as well or better in the future, so invest with caution.

Economy

NASD Exchange Falls 0.22% After Investors Lose N4.8bn

Published

32 minutes ago

29/04/2026

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange weakened by 0.22 per cent on Tuesday, April 28, with the market capitalisation down by N4.8 billion to N2.420 trillion from N2.425 trillion, and the NASD Unlisted Security Index (NSI) down by 9.01 points to 4,044.96 points from 4,053.97 points.

During the session, the price of Central Securities Clearing System (CSCS) Plc went down by N1.82 to N767.05 per share from N78.87 per share, while FrieslandCampina Wamco Nigeria Plc appreciated by N1.90 to N100.00 per unit from N98.10 per unit.

According to data, the value of trades increased by 265.7 per cent to N27.1 million from N7.4 million units, and the volume of transactions surged by 305.2 per cent to 1.3 million units from 319,831 units, while the number of deals decreased by 6.9 per cent to 27 deals from 29 deals.

Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with the sale of 3.4 billion units valued at N8.4 billion, followed by CSCS Plc with 59.8 million units exchanged for N4.0 billion, and Okitipupa Plc with 27.8 million units traded for N1.9 billion.

GNI Plc also finished as the most traded stock by volume on a year-to-date basis, with a turnover of 3.4 billion units worth N8.4 billion, trailed by Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion.

Economy

Naira Crashes to N1,380/$ at Official Market, N1,390/$1 at Black Market

Published

1 hour ago

29/04/2026

Adedapo Adesanya

By Adedapo Adesanya

Pressure is beginning to mount on the Nigerian Naira in the different segments of the foreign exchange (FX) market despite an oil windfall triggered by the Middle East crisis.

On Monday, April 27, the domestic currency further weakened against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) by N16.47 or 1.2 per cent to N1,380.71/$1 from the previous day’s N1,364.24/$1.

It was not different against the Pound Sterling in the same market window, as it lost N16.04 to trade at N1,863.76/£1 versus Monday’s closing rate of N1,847.72/£1, and against the Euro, it slipped by N12.72 to close at N1,615.01/€1 versus N1,602.29/€1.

The Naira also depreciated against the Dollar at the black market yesterday by N5 to quote at N1,390/$1 compared with the previous price of N1,385, and at the GTBank forex counter, it further crashed by N9 to settle at N1,379/$1 compared with the preceding session’s N1,370/$1.

The continued decline of the Naira comes as traders increasingly seek other safe-haven currencies amid continued global disruptions.

The benefit awash in the global market is making foreign portfolio investors stay short in Nigerian markets. Despite this, the daily FX publication released showed that interbank turnover rose to $98.829 million across 78 deals, up from $76.65 million.

Meanwhile, the cryptocurrency market remained cautious, with Bitcoin (BTC) trading at $77,216.66 despite surging oil prices and geopolitical tensions over a potential extended US naval blockade of the Strait of Hormuz.

Analysts say the supply overhang has finally dried up, and the sellers who were spooked by macro shifts or quantum fears have already exited, leaving the market much thinner on the sell-side.

Investors will await decisions made by central banks this week. The US Federal Reserve will announce its rate decision later on Wednesday, while the European Central Bank (ECB) follows on Thursday.

Ethereum (ETH) gained 1.5 per cent to trade at $2,324.59, Dogecoin (DOGE) chalked up 1.4 per cent to sell for $0.1016, Solana (SOL) appreciated by 0.6 per cent to $84.85, Cardano (ADA) grew by 0.5 per cent to $0.2483, and Binance Coin (BNB) advanced by 0.2 per cent to $627.15.

However, TRON (TRX) depreciated by 0.6 per cent to $0.3224, and Ripple (XRP) lost 0.03 per cent to sell at $1.39, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) were unchanged at $1.00 each.

Economy

Oil up 3% as Hormuz Disruption Outweighs UAE OPEC Exit

Published

2 hours ago

29/04/2026

Adedapo Adesanya

By Adedapo Adesanya

Oil was up by nearly 3 per cent on Tuesday as persistent worries about supply constraints from the closed Strait of Hormuz continued, with Brent futures for June rising by $3.03 or 2.8 per cent to $111.26 a barrel, and the US West Texas Intermediate (WTI) crude futures growing by $3.56 or 3.7 per cent to $99.93 a barrel.

An earlier round of negotiations between the United States and Iran collapsed last week after face-to-face talks failed.

Ship-tracking data showed significant disruptions in the region, with six Iranian oil tankers forced to turn back due to the US blockade, but some traffic is still moving.

Prices trimmed some of the advances after the United Arab Emirates (UAE), the fourth-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC), said on Tuesday it would exit the group on this Friday, May 1, 2026.

This dealt a blow to the oil-exporting group and its de facto leader, Saudi Arabia.

The UAE could quickly ⁠add between 1 million and 1.5 million barrels per day of output. However, with the Strait of Hormuz effectively closed, analysts said that there’s nowhere for that supply to go.

The UAE joined OPEC in 1967, but tension with Saudi Arabia over production quotas has been building for years.

Under the OPEC+ deal, the country has been held to roughly 3 million barrels per day while sitting on capacity above 4 million. It has been pushing toward 5 million barrels per day by 2027, and that target is hard to achieve with quotas built around someone else’s view of the market.

The war in Yemen broke whatever was left of diplomatic patience.

President Donald Trump said he was unhappy with the latest Iranian proposal to end the war. The proposal would avoid addressing the nuclear programme until hostilities cease and Gulf shipping disputes are resolved.

The Idemitsu Maru, ‌a Panama-flagged ⁠tanker carrying 2 million barrels of Saudi oil, and an LNG tanker managed by the Abu Dhabi National Oil Company (ADNOC) crossed the Strait on Tuesday, shipping data showed.

Vortexa data showed that the amount of crude oil held around the world on tankers that have been stationary for at least seven days rose to 153.11 million barrels as of April 24.

The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell by 1.79 million barrels in the week ending April 24. The official data from the US Energy Information Administration (EIA) will be released later on Wednesday.