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 Modupe Gbadeyanka
The federal government, the 36 states of the federation and the 774 local government areas have received N1.727 trillion from the Federal Accounts Allocation Committee (FAAC) for December 2024.
The funds were disbursed to the three tiers of government from the revenue generated by the nation in November 2024.
At the December meeting of FAAC held in Abuja, it was stated that the amount distributed comprised distributable statutory revenue of N455.354 billion, distributable Value Added Tax (VAT) revenue of N585.700 billion, Electronic Money Transfer Levy (EMTL) revenue of N15.046 billion and Exchange Difference revenue of N671.392 billion.
According to a statement signed on Friday by the Director of Press and Public Relations for FAAC, Mr Bawa Mokwa, the money generated last month was about N3.143 trillion, with N103.307 billion used for cost of collection and N1.312 trillion for transfers, interventions and refunds.
It was disclosed that gross statutory revenue of N1.827 trillion was received compared with the N1.336 trillion recorded a month earlier.
The statement said gross revenue of N628.972 billion was available from VAT versus N668.291 billion in the preceding month.
The organisation stated that last month, oil and gas royalty and CET levies recorded significant increases, while excise duty, VAT, import duty, Petroleum Profit Tax (PPT), Companies Income Tax (CIT) and EMTL decreased considerably.
As for the sharing, FAAC disclosed that from the N1.727 trillion, the central government got N581.856 billion, the states received N549.792 billion, the councils took N402.553 billion, while the benefiting states got N193.291 billion as 13 per cent derivation revenue.
From the N585.700 billion VAT earnings, the national government got N87.855 billion, the states received N292.850 billion and the local councils were given N204.995 billion.
Also, from the N455.354 billion distributable statutory revenue, the federal government was given N175.690 billion, the states got N89.113 billion, the local governments had N68.702 billion, and the benefiting states received N121.849 billion as 13 per cent derivation revenue.
In addition, from the N15.046 billion EMTL revenue, FAAC shared N2.257 billion to the federal government, disbursed N7.523 billion to the states and transferred N5.266 billion to the local councils.
Further, from the N671.392 billion Exchange Difference earnings, it gave central government N316.054 billion, the states N160.306 billion, the local government areas N123.590 billion, and the oil-producing states N71.442 billion as 13 per cent derivation revenue.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.65 per cent gain on Friday, December 13, boosted by three equities admitted on the trading platform.
On the last trading session of the week, Okitipupa Plc appreciated by N2.70 to settle at N29.74 per share versus Thursday’s closing price of N27.04 per share, FrieslandCampina Wamco Nigeria Plc added N2.49 to end the session at N42.85 per unit compared with the previous day’s N40.36 per unit, and Afriland Properties Plc gained 50 Kobo to close at N16.30 per share, in contrast to the preceding session’s N15.80 per share.
Consequently, the market capitalisation added N6.89 billion to settle at N1.062 trillion compared with the preceding day’s N1.055 trillion and the NASD Unlisted Security Index (NSI) gained 19.66 points to wrap the session at 3,032.16 points compared with 3,012.50 points recorded in the previous session.
Yesterday, the volume of securities traded by investors increased by 171.6 per cent to 1.2 million units from the 447,905 units recorded a day earlier, but the value of shares traded by the market participants declined by 19.3 per cent to N2.4 million from the N3.02 million achieved a day earlier, and the number of deals went down by 14.3 per cent to 18 deals from 21 deals.
At the close of business, Geo-Fluids Plc was the most active stock by volume on a year-to-date basis with a turnover of 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with the sale of 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.
In the same vein, Aradel Holdings Plc remained the most active stock by value on a year-to-date basis with the sale of 108.7 million units for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with a turnover of 297.3 million units worth N5.3 billion.
By Adedapo Adesanya
The Naira appreciated further against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N1.50 or 0.09 per cent to close at N1,533.00/$1 on Friday, December 13 versus the N1,534.50/$1 it was transacted on Thursday.
The local currency has continued to benefit from the Electronic Foreign Exchange Matching System (EFEMS) introduced by the Central Bank of Nigeria (CBN) this month.
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN.
Market analysts say the publication of real-time prices and buy-sell orders data from this system has lent support to the Naira in the official market and tackled speculation.
In the official market yesterday, the domestic currency improved its value against the Pound Sterling by N12.58 to wrap the session at N1,942.19/£1 compared with the previous day’s N1,954.77/£1 and against the Euro, it gained N2.44 to close at N1,612.85/€1 versus Thursday’s closing price of N1,610.41/€1.
At the black market, the Nigerian Naira appreciated against the greenback on Friday by N30 to sell for N1,650/$1 compared with the preceding session’s value of N1,680/$1.
Meanwhile, the cryptocurrency market was largely positive as investors banked on recent signals, including fresh support from US President-elect, Mr Donald Trump, as well as interest rate cuts by the European Central Bank (ECB).
Ripple (XRP) added 7.3 per cent to sell at $2.49, Binance Coin (BNB) rose by 3.5 per cent to $728.28, Cardano (ADA) expanded by 2.4 per cent to trade at $1.11, Litecoin (LTC) increased by 2.3 per cent to $122.56, Bitcoin (BTC) gained 1.9 per cent to settle at $101,766.17, Dogecoin (DOGE) jumped by 1.2 per cent to $0.4064, Solana (SOL) soared by 0.7 per cent to $226.15 and Ethereum (ETH) advanced by 0.6 per cent to $3,925.35, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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