Economy
Risks and Collective Investment Schemes: A Case for Money Market Funds
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.
By Dipo Olowookere
The bulls regained control of the Nigerian Exchange (NGX) Limited on Friday after surrendering power to the bears a day earlier as a result of mild selling pressure.
Yesterday, the Nigerian bourse rebounded by 0.54 per cent, mainly due to the gains recorded by First Holdco and others.
Data harvested by Business Post indicated that the industrial goods and energy sectors were flat, while the banking index chalked up 3.13 per cent. The insurance space expanded by 1.08 per cent, and the consumer goods counter rose by 0.21 per cent.
Consequently, the All-Share Index (ASI) went up by 1,316.52 points to 243,462.13 points from 242,145.61 points, and the market capitalisation grew by N850 billion to N157.057 trillion from N156.207 trillion.
The market breadth index was bullish during the last trading session of this week, printing 31 appreciating stocks and 23 depreciating stocks, representing strong investor sentiment.
First Holdco led the advancers’ log after it climbed 9.97 per cent to N95.95, Haldane McCall appreciated by 9.94 per cent to N3.65, LivingTrust Mortgage Bank soared by 9.73 per cent to N3.72, LASACO Assurance jumped by 5.26 per cent to N2.00, and Thomas Wyatt gained 5.10 per cent to quote at N3.09.
On the flip side, Red Star Express declined by 9.50 per cent to N20.00, Omatek slipped by 6.08 per cent to N1.70, C&I Leasing shrank by 5.93 per cent to N5.55, Jaiz Bank crashed by 5.03 per cent to N8.50, and Livestock Feed fell by 3.89 per cent to N8.65.
As for the activity chart, market participants bought and sold 685.9 million equities for N42.7 billion in 44,134 deals on Friday versus the 498.5 million equities worth N34.9 billion traded in 39,484 deals on Thursday, implying a rise in the trading volume, value, and number of deals by 37.59 per cent, 22.35 per cent, and 11.78 per cent, respectively.
Investors’ darling for the day was First Holdco, with a turnover of 225.9 billion units valued at N21.0 billion, Guinea Insurance sold 53.4 million units for N45.2 million, Zenith Bank traded 41.5 million units worth N4.7 billion, Access Holdings exchanged 29.1 million units valued at N720.6 million, and UBA exchanged 27.5 million units for N1.2 billion.
By Modupe Gbadeyanka
The Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON) has appealed to the Nigeria Customs Service (NCS) to deepen its sensitisation on the newly introduced Green Tax Surcharge Policy.
The chairman of APFFLON, Mr Akeem Ayobiojo, made this plea on behalf of his colleagues on Tuesday, July 14, 2026, at the Customs House in Abuja, during a stakeholders’ engagement with the agency.
He also called for improvements in the administration of Pre-Arrival Assessment Reports and Post Clearance Audit and the African Continental Free Trade Area (AfCFTA).
Mr Ayobiojo stated that freight forwarders were happy to work with the customs, commending the organisation for implementing Chapter 99, describing it as a major relief for manufacturers.
He, however, emphasised that a deeper understanding of the new tax was necessary for his members, saying more predictable procedures would reduce delays and unexpected costs for importers and freight forwarders.
In his remarks, the Comptroller-General of Customs, Mr Adewale Adeniyi, assured manufacturers, freight forwarders and other players in the nation’s trade sector that the NCS would continue to engage them on fiscal policies affecting their businesses, saying sustained dialogue remains key to resolving implementation challenges and improving the country’s trading environment.
He also promised them the service’s resolve to enhance and facilitate trade, acknowledging that, “Your feedback is important because it helps us understand what is happening in the field, and where necessary, we will take your concerns to the Federal Ministry of Finance and other relevant government institutions.”
Speaking about Authorised Economic Operator (AEO), Mr Adeniyi further explained that Nigeria would not lower the standards required under the Authorised Economic Operator Programme as the initiative is guided by global benchmarks established by the World Customs Organisation (WCO).
On her part, the Deputy Comptroller-General of Customs for Tariff and Trade, Ms Caroline Niagwan, clarified that electric vehicles can be imported without payment of duty only by holders of Import Duty Exemption Certificate (IDEC) issued by the Federal Ministry of Finance.
She also urged importers facing classification disputes to take advantage of the Advance Ruling system, noting, “Once an Advance Ruling is issued based on genuine documentation, importers have certainty on classification, valuation or origin before the goods arrive, thereby reducing unnecessary disputes during clearance.”
By Adedapo Adesanya
The Naira appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, July 17, by N1.35 or 0.07 per cent to N1,380.18/$1 from N1,381.53/$1.
It also improved its value against the Pound Sterling in the same market segment during the session by N11.75 to trade at N1,854.42/£1 compared with the previous day’s N1,866.17/£1, and gained N5.69 against the Euro to sell at N1,576.99/€1 versus Thursday’s closing price of N1,582.68/€1.
In the same vein, the Naira chalked up N1 against the United States currency yesterday at the GTBank forex desk to quote at N1,388/$1, in contrast to the preceding day’s N1,389/$1, but closed flat at the black market at N1,405/$1.
The appreciation of the Nigerian currency on Friday came amid fresh signals that Nigeria is building its external reserves for protection against shocks and excessive currency volatility.
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, said the country’s gross reserves had risen above approximately $52 billion by 15 July, while net reserves had increased from about $3 billion when the current CBN leadership took office to more than $40 billion.
Mr Cardoso linked the increase in reserves to reforms that had restored greater confidence in the foreign exchange system. He also pointed to efforts to diversify foreign currency inflows, including policies designed to increase remittances through official channels.
He noted that monthly diaspora remittances had risen above $600 million and the CBN expected them to reach approximately $1 billion by the end of 2026. The target is part of a broader effort to grow reserves through recurring inflows rather than temporary measures.
The improvement, he argued, had strengthened Nigeria’s capacity to respond when unexpected events threatened market stability.
The apex bank has also launched a new digital platform that will track every foreign exchange transaction involving Bureau De Change (BDC) operators, marking a major step in its efforts to improve transparency and strengthen oversight of Nigeria’s retail forex market.
As for the crypto market, prices were up as markets overlooked geopolitical developments and macro forces weighing on the whole market ecosystem rather than anything crypto-specific, with Cardano (ADA) up by 4.6 per cent to $0.1661.
Bitcoin (BTC) jumped by 1.8 per cent to $63,968.32, Ethereum (ETH) improved by 0.9 per cent to $1,843.88, Dogecoin (DOGE) also rose by 0.9 per cent to $0.0723, Solana (SOL) soared by 0.6 per cent to $74.90, Ripple (XRP) also appreciated by 0.6 per cent to $1.08, and Binance Coin (BNB) advanced by 0.1 per cent to $567.32.
However, TRON (TRX) depreciated by 0.2 per cent to close at $0.3218, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
