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
Food Concepts Plc neutralized the gains recorded by three securities, returning the NASD Over-the-Counter (OTC) Securities Exchange into the negative territory with a 0.27 per cent loss on Thursday, December 4.
Yesterday, the share price of the parent company of Chicken Republic and PieXpress declined by 34 Kobo to sell at N3.15 per unit compared with the previous day’s N3.49 per unit.
This shrank the market capitalisation of the OTC bourse by N5.72 billion to N2.136 billion from N2.142 trillion and weakened the NASD Unlisted Security Index (NSI) by 9.57 points to 3,571.53 points from 3,581.10 points.
Business Post reports that Central Securities Clearing System (CSCS) Plc went down by 50 Kobo to N38.50 per share from N38.00 per share, FrieslandCampina Wamco Nigeria Plc gained 29 Kobo to sell at N55.79 per unit versus N55.50 per unit, and Geo-Fluids Plc added 5 Kobo to close at N4.60 per share compared with Wednesday’s closing price of N4.55 per share.
Trading data indicated that the volume of securities recorded at the session surged by 6,885.3 per cent to 4.3 million units from the 61,570 units posted a day earlier, the value of securities increased by 10,301.7 per cent to N947.2 million from N3.3 million, and the number of deals went up by 146.7 per cent to 37 deals from the 15 deals achieved in the previous trading session.
At the close of business, Infrastructure Credit Guarantee Company (InfraCredit) Plc was the most traded stock by value on a year-to-date basis with the sale of 5.8 billion units for N16.4 billion, trailed by Okitipupa Plc with 170.4 million units worth N8.0 billion, and Air Liquide Plc with 507.5 million units valued at N4.2 billion.
InfraCredit Plc also finished the session as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Dipo Olowookere
The upward trend witnessed at the Nigerian Exchange (NGX) Limited in recent sessions continued on Thursday as it further improved by 0.10 per cent.
This was despite investor sentiment turning bearish after the local equity market ended with 23 price gainers and 28 price gainers, indicating a negative market breadth index.
UAC Nigeria gained 10.00 per cent to finish at N88.00, Morison Industries appreciated by 9.94 per cent to N3.54, Ecobank rose by 8.53 per cent to N36.90, and Coronation Insurance grew by 8.47 per cent to N2.56.
On the flip side, Ellah Lakes depreciated by 10.00 per cent to N13.14, Eunisell Nigeria also shed 10.00 per cent to finish at N72.90, Transcorp Hotels slipped by 9.95 per cent to N157.50, Omatek shrank by 9.23 per cent to N1.18, and Guinea Insurance dipped by 8.46 per cent to N1.19.
Yesterday, the All-Share Index (ASI) went up by 152.28 points to 145,476.15 points from 145,323.87 points and the market capitalisation chalked up N97 billion to finish at N92.726 trillion compared with the previous day’s N92.629 trillion.
Customs Street was bubbling with activities on Thursday, though the trading volume and value slightly went down, according to data.
A total of 1.9 billion stocks worth N19.2 billion exchanged hands in 23,369 deals during the session versus the N2.3 billion valued at N21.0 billion traded in 21,513 deals a day earlier.
This showed that the number of deals increased by 8.63 per cent, the volume of transactions depleted by 17.39 per cent, and the value of trades decreased by 8.57 per cent.
For another trading day, eTranzact led the activity chart with 1.6 billion units sold for N6.4 billion, Fidelity Bank traded 31.0 million units worth N589.3 million, GTCO exchanged 28.3 million units valued at N2.5 billion, Zenith Bank transacted 27.1 million units for N1.6 billion, and Ecobank traded 21.9 million units worth N744.3 million.
By Adedapo Adesanya
The Naira marginally depreciated against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, December 4 amid renewed forex pressure associated with December.
At the official market yesterday, the Nigerian currency lost 0.01 per cent or 18 Kobo against the Dollar to close at N1,447.83/$1 compared with the previous day’s N1,447.65/$1.
It was not a different scenario with the local currency in the same market segment against the Pound Sterling as it further shed N15.43 to sell for N1,930.97/£1 versus Wednesday’s closing price of N1,925.08/£1 and declined against the Euro by 20 Kobo to finish at N1,688.74/€1 compared with the preceding session’s N1,688.54/€1.
Similarly, the Nigerian Naira lost N5 against the greenback in the black market to quote at N1,465/$1 compared with the previous day’s value of N1,460/$1 but closed flat against the Dollar at the GTBank FX counter at N1,453/$1.
Fluctuations in trading range is expected to continue during the festive season as traders expect the Nigerian currency to be stable, supported by intervention s by to the Central Bank of Nigeria (CBN)in the face of steady dollar demand.
Support is also expected in coming weeks as seasonal activities, particularly the stylised “Detty December” festivities, will see inflows that will give the Naira a boost after it depreciated mildly last month, according to a new report.
“As the festive Detty December season intensifies, inbound travel, tourism spending, and diaspora inflows are expected to provide moderate support for FX liquidity,” analysts at the research unit of FMDA said in its latest monthly report for November.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450 next week, buoyed by improved FX interventions by the apex bank.
Meanwhile, the crypto market was down as the US Federal Reserve’s preferred inflation gauge, core PCE, likely rose in September—moving in the wrong direction. However, volatility indices show no signs of major turbulence.
If the actual figure matches estimates, it would mark 55 straight months of inflation above the US central bank’s 2 per cent target. The sticky inflation would strengthen the hawkish policymakers, who are in favour of slower rate cuts.
Ripple (XRP) depreciated by 4.5 per cent to $2.08, Solana (SOL) went down by 3.8 per cent to $138.11, Litecoin (LTC) shrank by 3.1 per cent to $83.23, Dogecoin (DOGE) slid by 2.5 per cent to $0.1463, Cardano (ADA) declined by 2.1 per cent to $0.4368, Bitcoin (BTC) fell by 0.9 per cent to $91,975.45, Binance Coin (BNB) crumbled by 0.9 per cent to $899.41, and Ethereum (ETH) dropped by 0.7 per cent to $3,156.44, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
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