Economy

Risks and Collective Investment Schemes: A Case for Money Market Funds

Published

7 years ago

02/07/2019

Asset management companies in Nigeria are increasingly offering money market funds (MMFs) as an asset class to reach the country’s risk adverse retail market. These funds – which are perceived to be low risk alternatives to other more traditional asset classes, account for over 70% of collective investment schemes and 25% of non- pension assets under management.

In particular, MMFs offer comparable yields to short-term government securities, with an annualised yield of circa 13.2% as at Q1 2019, higher than the 11.3% on 90-day treasury bills as at the same date.

In managing these funds, asset managers have traditionally conformed to higher credit standards above the benchmarks, with most holding over 65% of net assets in risk free securities and other highly rated securities (above the benchmark of Bbb), resulting in a superior risk reward profile when compared with a number of investment vehicles.

Consequently, money market funds operating within these investment constraints typically have investment grade ratings from Agusto & Co., Nigeria’s foremost rating agency. As at 31 March 2019, Agusto & Co had live ratings for 14 of the 18 registered money market funds in Nigeria

Table 1: Fund Risk Rating League Table – Money Market Funds

S/N	Fund	Fund Size ₦ Million	Agusto Fund Risk Rating
1	Stanbic IBTC Money Market Fund	253,221	Aa(F)
2	ARM Money Market Fund	52,920	Aa(F)
3	FBN Money Market Fund	137,501	Aa-(F)
4	Abacus Money Market Fund	9,889	A+(F)
5	AXA Mansard Money Market Fund	26,074	A(F)
6	United Capital Money Market Fund	3,581	A(F)
7	Chapel Hill Denham Money Market Fund	1,306	A(F)
8	Meristem Money Market Fund	761	A(F)
9	EDC Money Market Fund (A)	6,052	A-(F)
	EDC Money Market Fund (B)	465	A-(F)
10	Zenith Money Market Fund	6,847	A-(F)
11	Coronation Money Market Fund	5,653	A-(F)
12	Cordros Money Market Fund	5,261	A-(F)
13	Legacy Money Market Fund	1,499	A-(F)
14	GDL Money Market Fund	866	Bbb+(F)

Source: Agusto & Co and Securities and Exchange Commission (Information as at 29 March 2019)

An Agusto & Co fund risk rating assesses exposure to downside (loss of principal) risk based on a portfolio’s investment strategy and guidelines. In particular, we assess a Fund’s exposure to credit, liquidity, interest rate, currency and pricing risks.

Money market funds are set to continue to dominate the collective investment schemes market in the short to medium term, accounting for a projected 28% of total non-pension AuM by 2021 (2018: 25%), with at least three additional MMFs expected to launch in 2019 alone. Our expectation is supported by the current high-risk environment, which has resulted in many investors being more conservative and seeking risk averse asset classes away from traditional fixed income and equity instruments.

Money market funds continue to appeal to a broad spectrum of customers ranging from institutional investors to HNIs and the mass affluent. Furthermore, these funds target members of the general public, with many MMFs having a minimum investment range of ₦5,000 – ₦10,000.

We expect these funds to continue to drive retail participation in the Nigerian capital market, given the current macroeconomic headwinds that continue to hamper the performance of other traditional investment outlets. We believe that in the long term, Money Market Funds may represent the silver lining in mobilising savings and creating a huge pool of investible funds while also creating a new culture of savings and investments.

Economy

Four Securities Erase N51.17bn from NASD Exchange

Published

24 hours ago

27/06/2026

Adedapo Adesanya

By Adedapo Adesanya

Four securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.95 per cent on Friday, erasing N41.17 billion from the bourse, which had its market capitalisation at N2.567 trillion compared with the previous session’s N2.618 trillion.

In the same vein, the NASD Unlisted Security Index (NSI) decreased at the close of business by 85.28 points to 4,277.07 points from 4,362.32 points.

The price decliners were led by 11 Plc, which gave up N20.50 to sell at N200.50 per share compared with the preceding day’s N221.00 per share, FrieslandCampina Wamco Nigeria Plc dropped N16.94 to close at N155.20 per unit versus Thursday’s closing price of N172.14 per unit, Central Securities Clearing System (CSCS) Plc went down by N2.11 to N84.68 per share from N86.79 per share, and Afriland Properties Plc lost 11 Kobo to end at N16.74 per unit, in contrast to the N16.85 per unit it closed a day earlier.

During the trading day, the value of transactions jumped by 172.1 per cent to N29.9 million from the preceding session’s N10.9 million, and the volume of trades soared by 136.5 per cent to 955,096 units from the previous 403,901 units, while the number of deals went down by 11.4 per cent to 31 deals from 35 deals.

Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 68.6 million units sold for N4.7 billion.

GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.

Economy

Cautious Trading, Profit-taking Weaken Nigeria’s Stock Exchange by 0.66%

Published

1 day ago

27/06/2026

Dipo Olowookere

By Dipo Olowookere

The last trading session of this week on the floor of the Nigerian Exchange (NGX) Limited ended on a negative note, with a 0.66 per cent loss on Friday.

This was influenced by sustained selling pressure and cautious trading, which forced investors into profit-taking.

Data obtained by Business Post showed that the energy sector fell by 4.66 per cent, the insurance counter dipped by 2.23 per cent, the consumer goods index depreciated by 0.96 per cent, and the banking segment shed 0.28 per cent, while the industrial goods space remained unchanged.

At the close of business, the All-Share Index (ASI) of Nigeria’s stock exchange went down by 1,531.81 points to 232,049.02 points from 233,580.83 points, and the market capitalisation dropped N983 billion to settle at N148.905 trillion compared with Thursday’s N149.888 trillion.

Aradel was the worst-performing equity after it lost 10.00 per cent to close at N1,417.50. International Energy Insurance slipped by 9.95 per cent to N5.79, Trans-Nationwide Express depreciated by 9.89 per cent to N3.28, eTranzact crashed by 9.79 per cent to N14.75, and UPDC slumped by 9.72 per cent to N28.12.

The best-performing equity for the day was Universal Insurance, which gained 6.32 per cent to close at N1.01, McNichols grew by 5.52 per cent to N8.60, Linkage Assurance expanded by 4.67 per cent to N1.57, NGX Group appreciated by 4.35 per cent to N120.00, and Transcorp increased by 3.62 per cent to N41.50.

As look at the activity level indicated that investors traded 388.7 million stocks worth N18.4 billion in 44,631 deals compared with the 393.7 million stocks valued at N19.2 billion executed in 45,813 deals a day earlier, representing a decline in the trading volume, value, and number of deals by 1.27 per cent, 4.17 per cent, and 2.58 per cent, respectively.

Economy

Official FX Market Sees Naira Dip to N1,380.93/$1

Published

1 day ago

27/06/2026

Adedapo Adesanya

By Adedapo Adesanya

The Naira recorded a loss of 82 Kobo or 0.06 per cent against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 26, exchanging at N1,380.93/$1, in contrast to the previous day’s rate of N1,380.11/$1.

Equally, the domestic currency further weakened against the Pound Sterling in the official FX market yesterday by N6.06 to settle at N1,824.90/£1 versus the preceding session’s N1,818.84/£1, and lost N10.74 on the Euro to sell at N1,577 .58/€1 versus N1,566.84/€1.

At the GTBank forex counter, the Naira depreciated against the greenback during the session by N4 to close at N1,387/$1, in contrast to Thursday’s value of N1,383/$1, and at the parallel market, it was unchanged at N1,395/$1.

Interbank FX activity among financial institutions has fluctuated amid a sharp slowdown in forex market interventions by the Central Bank of Nigeria (CBN), as it allows demand and supply to move the market.

Also, a stronger greenback has generally put significant pressure on emerging-market currencies.

Nigeria has accessed the first tranche of a proposed $5 billion derivatives financing arrangement with First Abu Dhabi Bank PJSC, the largest lender in the United Arab Emirates (UAE).

The $5 billion facility, approved by the National Assembly earlier this year, is part of the federal government’s plan to diversify external financing sources and reduce borrowing costs. Structured as a Total Return Swap with First Abu Dhabi Bank, proceeds are earmarked for refinancing debt and supporting infrastructure financing.

If the proceeds are brought into the country through the official FX market, the transaction will increase the currency reserves or Dollar liquidity.

At the cryptocurrency market, Solana (SOL) grew by 2.2 per cent to $71.92, Cardano (ADA) gained 1.1 per cent to trade at $0.1474, Ripple (XRP) also appreciated by 1.1 per cent to $1.05, Dogecoin (DOGE) expanded by 0.9 per cent to $0.0755, and Ethereum (ETH) improved by 0.4 per cent to $1,578.84.

On the flip side, TRON (TRX) slid 0.6 per cent to $0.3203, Binance Coin (BNB) slumped by 0.3 per cent to $564.33, and Bitcoin fell by 0.2 per cent to $60,219.37, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.