Meristem Launches Dollar Fund for Capital Preservation Investors

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By Aduragbemi Omiyale

One of the leading brokerage companies in Nigeria, Meristem Securities Limited, has introduced a new fixed-income investment package known as Meristem Dollar Fund.

Business Post gathered that this open-ended mutual fund was designed to help investors hedge against the local currency, especially at a period when the Naira is witnessing high volatility amid rising inflation in the country.

Meristem disclosed that funds taken from investors would be invested in investment-grade sovereign and corporate Eurobonds, and other qualifying USD instruments issued by Nigerian entities as may be determined by the investment committee.

The company put the offer size at $5 million comprising 500,000 units of $10.00 each at par in the fund.

However, the minimum investment a unitholder may make in the fund is 50 units and in multiples of 50 units thereafter.

Meristem said the minimum holding period for an investment in the fund is 180 days and subscribers can redeem their units within five business days following receipt by the fund manager or any of its agents of a redemption notice.

“However, redemptions within six months of making the initial investment shall attract an early redemption fee of 25 per cent of the accrued income,” it stressed.

The firm said the mutual fund would be managed by its subsidiary, Meristem Wealth Management Limited, which boasts a fully paid-up capital of N500 million and is registered as Portfolio/Fund Managers with the Securities Exchange Commission (SEC).

Explaining the benefits of this investment opportunity, Meristem said the fund is for investors seeking long-term capital preservation whilst generating income and providing liquidity, diversification, and protection against currency fluctuation.

“The fund also seeks to assist investors who may not be able to invest in various individual dollar-denominated fixed-income securities due to expertise or the minimum tradeable size constraints to achieve their long-term investment goals,” it added.

But Meristem emphasised that investors in the fund should be willing to accept some degree of volatility in the price of the Fund and the possibility of losses.

“Consequently, it is important to have a complete understanding of the investment strategies and underlying products from which the Fund derives its value to evaluate the risks.

“However, a risk management framework that will minimize the impact of all the risks has been developed by the fund manager,” it stressed.

It disclosed that the investment could be tracked through its Wealth Buddy app, adding that investors have the option to reinvest their dividends in the fund.

It noted that “the 25 per cent of the net income that has accrued to the fund during a financial year shall automatically be reinvested in the fund amongst the unitholders per their respective holdings of the units.

“However, unitholders may opt to either receive the distribution in cash or re-invest in additional units (minimum of 50 units) of the fund, in line with the provisions of the Trust Deed.”

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