Economy
Mutual Funds Gain Traction as More Funds Hit Market
By Quantitative Financial Analytics
The Mutual Funds market in Nigeria is gaining momentum as more funds hit the market sending total NAV soaring.
The momentum is the result of fund management companies developing mutual funds products or acquiring alternative asset businesses to augment their fund offerings with a view to diversifying their revenue sources.
Some fund managers are also repackaging existing funds to align them to investors’ appetites and preferences.
Specifically, in late 2016 Afrinvest Asset Management Ltd carried out a corporate action on its Nigeria International Debt Fund resulting in a 1 for 10 stock split that makes the fund affordable to retail investors.
Recently, Nigeria Global Investment Fund, formerly an equity based fund, was reorganized into the Chapel Hill Denham Money Market Fund while BGL Nubian Fund was acquired by Alternative Capital Asset Partners (ACAP) and turned into ACAP Income fund.
In fact, the late 2016 and early 2017 has seen record fund launches with 11 launches in 2016 and 6 launches in 2017 so far giving rise to such funds as Abacus Money Market Fund by Investment One Funds Management Limited, AXA Mansard Money Market Fund and its Equity Fund counterpart, Cordros Money Market Fund as well as Greenwich Plus Money Market Fund and a lot more.
The effect of these events and introductions has been that mutual fund assets have ballooned within a short space of time.
A good impact of the new launches is that investors are now presented with many funds to choose from although that comes with the difficulty in manager due diligence and selection process because investors now have more managers to evaluate and do due diligence on.
Another driving force for the momentum is increase in investor interest represented by fund inflows. Mutual fund inflows have grown in leaps and bounds over the past few months especially among money market funds which investors now see as alternative to treasury bills and as safer than Ponzi schemes.
Within the first quarter of 2017, Quantitative Financial Analytics estimated that mutual funds attracted the sum of N42 billion inflows as against the N49 billion inflow recorded the entire 2016.
Those factors have combined to give a boost to the asset value of mutual funds.
As at April 13, 2017, Mutual fund assets had grown to N268.3 billion from the 2016-year end value of N223.6 billion.
With the growth in mutual funds and as investor interest and education increases, mutual fund may become the dominant vehicle used by both advisors and institutions to access investible funds hidden somewhere among investors.
It may as well become the investment vehicle for investors seeking diversified portfolios.
Our prediction is that if the growth continues, mutual funds will become part of the mainstream market in the years to come
Much of the momentum and growth is in the money market funds. Category of mutual funds Of the N42 billion estimated inflows in Q1 2017, N33 billion went to money market funds.
Again, out of the 11 new funds launched in 2016, 4 are money market funds while 3 of the 6 funds launched so far in 2017 are money market funds. While this seems to be a proliferation of money market funds, there is yet to be a single fund of funds in the Nigerian mutual fund universe.
A fund of fund, is a mutual fund that invests in other mutual funds rather than investing directly in stocks, bonds or other financial products.
The advantage of fund of funds is that it offers broader diversification than regular mutual funds. Fund of funds may even present more efficient ways to implement investment strategies. A disadvantage, however is that fund of funds subject investors to double fees.
The double fees notwithstanding, it is time for fund managers to be more creative with their product offerings which should include the launch of fund of funds in Nigeria, until then, the mutual fund industry seems to be gathering steam.
By Adedapo Adesanya
Nigeria’s maiden shipment under the African Continental Free Trade Area (AfCFTA) has successfully arrived at the Mombasa Port in Kenya.
According to the Nigeria AfCFTA Coordination Office in a statement, the development marks a historic moment for Africa’s trade landscape.
The Senior Trade Expert at the Nigeria AfCFTA Coordination Office, Mr Olusegun Olutayo, said in line with its mandate under the leadership of the National Coordinator, Mr Olusegun Awolowo, the office had coordinated the landmark event.
He said the achievement marked a significant milestone for Nigeria in realising the vision of increased intra-African trade and economic integration championed by the agreement in line with the decision of the AU Assembly at the 31st Ordinary Session of the Assembly.
“In times of escalating geopolitical tension and looming geo-economic fragmentation, AfCFTA presents a perfect opportunity for Africa to leverage trade as a strategic instrument for enhanced market access among state parties.
“This is a historic moment, a realisation of the vision of our continent’s founding fathers and mothers.”
He also said the first consignment which was a synthetic filaments product of Nigeria’s Lucky Fibres Limited (Lush), a subsidiary of the Tolaram Group, was exported under AfCFTA preferential terms.
Mr Olutayo lauded the bold economic reforms of President Bola Tinubu, emphasising their catalytic role in enabling the country’s active participation in AfCFTA, fostering continental economic integration and industrialisation goals.
He also commended the seamless cooperation and commitment from Kenyan authorities, which exemplifies the true spirit of AfCFTA.
He acknowledged the pivotal leadership role of the AfCFTA Secretariat in fostering the success and emphasised the collaborative efforts of the Kenya AfCFTA Implementation Committee and the Kenya Revenue Authority (Customs).
According to him, the shipment, exported under AfCFTA preferential trade terms, underscores partnership, shared vision, the agreement’s potential to transform Africa’s economic landscape and pave the way for a new era of trade-driven prosperity.
The AfCFTA seeks to create a single market across Africa by reducing barriers to trade, investment, and labour.
The agreement’s goal is to increase socioeconomic development, reduce poverty, and make Africa more competitive globally.
On March 21, 2018, the AfCFTA agreement was adopted and opened for signature in Kigali, Rwanda. The agreement entered into force on May 30, 2019 and officially commenced on January 2021
Former President Muhammadu Buhari established the National Action Committee on AfCFTA (NAC) in December 2019.
By Adedapo Adesanya
The Nigerian Securities and Exchange Commission (SEC) has fixed January 31 as deadline for all Capital Market Operators (CMOs) to renew their operating licence.
In a circular to the operators on Sunday, the apex regulatory agency in the country’s capital market said the annual registration renewal would last between January 1 and 31, 2025.
SEC said the annual registration renewal enforcement for CMOs was aimed at ensuring that only “fit and proper” persons operate in the capital market, warning that CMOs without valid registration will be penalised and may be excluded from capital market activities.
”This is to inform all CMOs and the general public that the annual renewal of registration of CMOs for the year 2025 will commence from January 01.
“All CMOs applying for renewal are required to include their 2025 annual subscription receipt from their respective trade groups as part of their application.
“In line with the commission’s Rules & Regulations, all CMOs are to complete the process of renewal of registration for 2025 on or before January 31 via registration renewal portal at www.eportal.sec.gov.ng,” it said.
The commission added that CMOs desiring to make enquiries or get support to complete the process should contact [email protected].
The regulator said it had in 2021 re-introduced periodic registration renewal by CMOs to create a reliable active operators’ data bank in the country’s capital market.
It said the renewal arrangement aimed at updating operators information on capital market for official use by local and foreign investors, other regulatory agencies and the public.
The agency added that the renewals would drastically reduce incidences of unethical practices by CMOs which may affect investors’ confidence and impact the capital market negatively, noting that the exercise will strengthen supervision and monitoring of CMOs by the commission.
By Adedapo Adesanya
The third trading week of 2025 ended on a positive note at the NASD Over-the-Counter (OTC) Securities Exchange, with seven equities on the platform inspiring a 1.24 per cent growth.
Consequently, the market capitalisation of the bourse increased by N21.56 billion during the five-day trading week to N1.075 trillion from the N1.053 trillion quoted in the preceding week (Week 2) as the NASD Unlisted Security Index (NSI) expanded by 37.98 points to 3,111.91 points from the 3,073.93 points it ended in the preceding week.
In the period under review, the volume of transactions went down by 42.1 per cent to 9.45 million units from the 16.30 million units in the previous week, as the value of trades declined by 53.1 per cent to N48.4 million from the N104.11 million, with these transactions completed in 122 deals involving 15 different stocks.
Industrial and General Insurance (IGI) Plc gained 50 per cent in the week to close at 36 Kobo per share versus 34 Kobo per share, Mixta Real Estate Plc increased by 20 per cent to end at N2.58 per unit compared with the previous week’s N2.15 per unit, and Okitipupa Plc rose by 10 per cent to N39.59 per share from N35.99 per share.
Further, UBN Property Plc grew by 10 per cent to N2.20 per unit from N2.02 per unit, Newrest Asl Plc jumped by 9.9 per cent to N31.38 per share from N28.53 per share, FrieslandCampina Wamco Plc surged by 3.7 per cent to N39.65 per unit from N38.22 per unit, and 11 Plc advanced by 0.3 per cent to N256.00 per share from N255.31 per share.
FrieslandCampina Wamco Plc topped the activity chart last week by value with with N0.030 billion, 11 Plc recorded N0.009 billion, Central Security Clearing System (CSCS) Plc raked in N0.004 billion, IGI Plc followed with N0.002 billion, and Geo-Fluids Plc recorded N0.002 billion.
However, IGI Plc was the most traded instrument by volume with 7.5 million units, FrieslandCampina Wamco Plc transacted 0.77 million units, UBN Property Plc recorded 0.38 million, Geo-Fluids Plc traded 0.37 million units, and CSCS Plc posted 0.16 million units.
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