Economy
Why Nigeria’s Mutual Funds Now Attract International Interest—Experts
By Dipo Olowookere
Recently, the Securities & Exchange Commission (SEC) announced that total Asset Under Management (AUM) of mutual funds in Nigeria topped N300 billion for the first time ever.
This was because there has been increased interest and investments in Mutual Funds in Nigeria and experts attributed this to various factors not excluding the current state of the economy, stock market and interest rate fluctuations as well as much improved mutual funds offerings.
This is further backed by a recent report by Quantitative Financial Analytics which estimated that Nigerian mutual funds attracted the sum of N42 billion inflows in Q1, 2017 as against the N49 billion inflow recorded the entire 2016.
It was also observed that Nigeria’s mutual funds’ assets grew to N318 billion as at the beginning of H2, 2017, up by 42 percent on a YTD basis from the 2016-year end value of N223.6 billion.
Mr Emeka Okolo, a Senior Fund Manager and Head, Coronation Asset Management, speaking on this trend at the launch of one of such funds, The Coronation Mutual Funds, noted that active portfolio management by experienced professionals offer investors better prospects on their investments especially in periods of market volatility and economic downturns as is being experienced in Nigeria, making mutual funds an optimal choice.
On the Coronation Mutual Funds, he further added, “No one can doubt the capacity and expertise of Coronation Asset Management to deliver competitive returns to investors in the Coronation Mutual Funds.
“The level of professionalism and quality of investments will be difficult to match by other mutual fund managers in Nigeria and the West African sub-region.
“This, coupled with the proposed investment mix and the fund structures, distinguish these Mutual Funds.”
Indeed the recently launched, Naira denominated, open-ended mutual funds by Coronation Assets Management Ltd which witnessed a high subscription rate by individual, retail and institutional investors has continued to elicit excitement.
“The Mutual Funds, N1.5 billion Money Market Fund, N400 million Fixed Income Fund and the N200 million Balanced Fund, were all offered at par of N1 each.
In the same vein, Chairman of the Bank, Mr Tunde Folawiyo, said that the funds offer all strata of investors, individual and corporate, an opportunity to diversify their investment portfolios backed by the strength of the Coronation Brand and managed by a team of experienced professionals at Coronation Asset Management.
According to him, the Money Market Fund will exclusively invest in short-dated money market instruments, offering capital preservation and liquidity to investors.
The Fixed Income Fund will invest in FGN and investment grade corporate bonds while the Balanced Fund will invest in a diversified portfolio of carefully chosen equity securities with strong fundamentals and prospects of delivering long term positive investment returns, while tactically investing in fixed income securities to actively manage short term volatility in its equities exposure.
The Money Market Fund and the Fixed Income Fund have been assigned low to medium risk ratings, “A- (NG)(f)” and “AA-/FV4 (NG)(f)” respectively, by Agusto & Co, a foremost Nigerian rating agency.
This IPO for the Mutual Funds came on the back of a strong financial year for the premium financial institution.
Recall that Coronation Merchant Bank, the parent company of Coronation Asset Management, grew its profits by 128 percent from December 2015 to December 2016.
The group’s financial strength, coupled with a focus on sound risk management, prudent investment strategies as well as a tradition of delivering excellent value to all stakeholders, has made the IPO for the Mutual Funds more inviting to investors.
The Coronation Mutual Funds are being overseen by institutions with strong track records of providing superior financial services with Coronation Asset Management acting as the Fund Manager, Citibank Nigeria as Custodian and United Securities Limited as Registrar to all three funds.
Stanbic IBTC Trustees Limited will acts as Trustee to the Balance and Fixed Income Funds while United Capital Trustees will act as Trustee to the Money Market Fund.
Investors can visit www.coronationam.com for more information on the Mutual Funds and learn more about Coronation Asset Management.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange dropped for the third consecutive session on Wednesday, March 18, by 0.39 per cent due to continued sell-offs.
In what would be the final trading session of the week due to public holidays on Thursday and Friday for Eid-el-Fitr, the NASD Unlisted Security Index (NSI) further dipped by 16.14 points to 4,114.75 points from 4,130.89 points, and the market capitalisation lost N9.66 billion to close at N2.461 trillion versus the previous day’s N2.471 trillion.
FrieslandCampina Wamco Nigeria Plc depreciated by N10.32 to sell at N112.00 per share versus N122.32 per share, NASD Plc dropped N4.50 to finish at N41.50 per unit compared with the previous session’s N46.00 per unit, and Geo-Fluids decreased by 9 Kobo to N3.02 per share from N3.11 per share.
On the flip side, Air Liquide Plc improved by N2.23 to N24.57 per unit from N22.34 per unit, Central Securities Clearing System (CSCS) Plc advanced by 90 Kobo to N76.33 per share from N75.43 per share, Food Concepts Plc rose by 24 Kobo to N3.30 per unit from N3.06 per unit, UBN Property Plc surged by 20 Kobo to N2.18 per share from N1.98 per share, Impresit Bakalori Plc jumped 16 Kobo to N1.83 per unit from N1.67 per unit, and First Trust Mortgage Bank Plc added 14 Kobo to trade at N1.89 per share versus N1.75 per share.
During the trading day, the volume of securities went up by 43,404.4 per cent to 400.8 million units from 921,265 units, the value of securities grew by 2,108.7 per cent to N1.2 billion from N54.7 million, and the number of deals soared by 23.7 per cent to 47 deals from 38 deals.
CSCS Plc ended the day as the most traded stock by value (year-to-date) with 38.7 million units valued at N2.4 billion, followed by Infrastructure Guarantee Credit Plc with 400 million units exchanged for N1.2 billion, and Okitipupa Plc with 6.4 million units traded for N1.2 billion.
Resourcery Plc finished the session as the most traded stock by volume (year-to-date) with 1.1 billion units worth N415.7 million, trailed by Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion, and Geo-Fluids Plc with 131.1 million units valued at N505.6 million.
By Dipo Olowookere
The Nigerian Exchange (NGX) experienced a pullback of 0.69 per cent as a result of profit-taking by investors, with shares in the banking and energy sectors mostly affected.
Data harvested by Business Post showed that the energy index was down by 4.58 per cent during the session, and the banking space lost 2.14 per cent.
They brought down the All-Share Index (ASI) by 1,402.56 points to 201,156.85 points from 202,559.41 points and shrank the market capitalisation by N900 billion to N129.126 trillion from N130.026 trillion.
Customs Street ended in red at midweek despite three of the five key sectors finishing in green. The consumer goods counter expanded by 1.19 per cent, the industrial goods index improved by 0.46 per cent, and the insurance sector grew by 0.43 per cent.
Red Star Express declined by 9.98 per cent to N25.70, Aradel Holdings went down by 9.68 per cent to N1,210.30, Presco lost 9.30 per cent to trade at N1,701.10, Living Trust Mortgage Bank crashed by 8.40 per cent to N4.80, and DAAR Communications dropped 7.50 per cent to end at N1.85.
On the flip side, Secure Electronic Technology gained 10.00 per cent to settle at N1.32, Guinness Nigeria rose by 9.92 per cent to N423.20, John Holt increased by 9.72 per cent to N11.85, Sovereign Trust Insurance surged by 9.57 per cent to N2.06, and Linkage Assurance chalked up 9.33 per cent to trade at N1.64.
Investor sentiment was weak yesterday after the bourse registered 33 price gainers and 38 price losers, indicating a negative market breadth index.
Market participants bought and sold 6.1 billion stocks valued at N130.1 billion in 58,562 deals compared with the 1.8 billion stocks worth N88.1 billion traded in 62,654 deals on Tuesday, representing a shortfall in the number of deals by 6.53 per cent, and a spike in the trading volume and value by 238.89 per cent and 47.67 per cent apiece.
The most active equity on Wednesday was eTranzact with 5.2 billion units sold for N24.3 billion, Wema Bank exchanged 111.4 million units worth N3.1 billion, Coronation Insurance transacted 96.4 million units valued at N303.9 million, Dangote Cement traded 75.2 million units for N56.5 billion, and Access Holdings exchanged 61.5 million units valued at N1.6 billion.
By Adedapo Adesanya
The Naira stumbled against the Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, March 18, by N8.96 or 0.67 per cent to trade at N1,353.00/$1, in contrast to the previous day’s rate of N1,344.04/$1.
Also, the local currency weakened against the Pound Sterling in the spot market at midweek by N6.06 to sell for N1,801.93/£1 compared with Tuesday’s value of N1,795.87/£1, and lost N4.75 against the Euro to quote at N1,556.22/€1 versus the preceding day’s N1,551.46/€1.
However, the Nigerian currency gained N2 against the greenback yesterday at the GTBank forex desk to close at N1,363/$1 versus the N1,365/$1 it was exchanged for a day earlier, and traded flat in the parallel market at N1,395/$1.
Nigeria’s external reserves fell by $178 million over three consecutive international payments recorded by the Central Bank of Nigeria (CBN), settling at $49.83 billion from $50.008 billion, indicating that there have been some interventions in the FX market for stability and liquidity.
While the wider outlook for the Naira is positive, potential disruptions to global oil supply have increased volatility in energy markets and could spike inflation with higher oil prices.
In the cryptocurrency market, Bitcoin (BTC) slipped below $71,000 on Wednesday as Federal Reserve Chair Jerome Powell flagged rising oil prices amid the war in Iran as a new inflation risk. It sold at $70,538.58.
The US central bank held interest rates steady as expected, but during his post-meeting press conference, Mr Powell acknowledged that the recent surge in energy prices is already feeding into the central bank’s outlook.
He said rising oil prices “for sure showed up” in policymakers’ higher inflation outlook for this year, lifting their forecast to 2.7 per cent from 2.4 per cent.
Further, Ethereum (ETH) lost 6.3 per cent to trade at $2,178.56, Cardano (ADA) fell by 6.1 per cent to $0.2714, Dogecoin (DOGE) dropped 5.7 per cent to close at $0.0096, Solana (SOL) dipped 4.8 per cent to $89.83, Ripple (XRP) slumped by 3.8 per cent to $1.46, and Binance Coin (BNB) declined by 3.7 per cent to $648.61.
However, TRON (TRX) appreciated by 0.4 per cent to $0.3037, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.
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