The Nation Newspaper

Tag: Mutual funds

  • EDC Fund Management launches Mutual Funds

    EDC Fund Management, the Asset Management arm of Ecobank in Nigeria, has announced the launch of two mutual funds –  The EDC Nigeria Money Market Fund, and the EDC Nigeria Fixed Income Fund.

    The mutual funds give customers of the corporation and other interested Nigerians the opportunity to diversify their investment portfolio with as little as N5,000 for the money market fund and N50,000 for the fixed income fund.

    Announcing the launch of the two funds in Lagos, EDC Fund Management Managing Director, Ibukun Oyedeji said the money market fund provides the benefits of pooled investment, allowing investors to invest in a diverse and high quality portfolio.

    “Although both funds are open-ended funds, the initial public offering period closes on November 30, 2016. Once, the approval of the Initial Public Offer is completed the funds have no closing date. Units in the Fund can be bought or sold any business day providing investors easy access to their money. The investor stands to benefit from distributions that will be made to unit holders on a quarterly basis for the Money Market Fund and semi -annual basis for the fixed income fund,” he said.

    “Like other mutual funds, each investor in a money market fund is considered a shareholder of the investment pool. She stated that the money market funds are managed within rigid and transparent guidelines to seek preservation of capital, liquidity and competitive yields. The money market fund has two classes – Class A caters for the retail investor while Class B is targeted toward corporate investors as a liquidity management solution,” he explained.

    The EDC Nigeria (Corporate) money market fund, he said, would assist large corporates to efficiently manage their day-to-day liquidity while they focus on more strategic initiatives for their business. The unit price for the Class B is N1 million.

  • SEC, fund managers strike partnership on N152b mutual funds

    Securities and Exchange Commission (SEC) and fund managers would work together to enlighten the investing public and further develop the mutual funds industry. The total assets of mutual funds in Nigeria are estimated at N152 billion.

    At a meeting between SEC and fund managers under the auspices of Fund Managers Association of Nigeria (FMAN), SEC and FMAN agreed on the need to further collaboration in order to develop the potential of the fund management industry and the capital market. Members of FMAN visited the acting director general of SEC, Mr. Mounir Gwarzo in Abuja.

    Gwarzo said SEC would embark on intensive investors’ education to woo retail and institutional investors in order to improve the level of domestic participation in the capital market.

    He said one of the strategies of the new management is to embark on huge public enlightenment programme with other stakeholders to educate the investing public.

    “Fund management is close to our heart as it is directly under our purview. In dealing with others, we partner with other Self Regulatory Organisations (SROs). We will collaborate with you anytime we want to commence the enlightenment through the use of town hall meetings, radio jingles among others. We are ready to put in money for market development and that is one of the cardinal objectives of this management,” Gwarzo said.

    President, Fund Managers Association of Nigeria (FMAN), Michael Adebola, noted that Nigerians need to have a lot of understanding about what mutual funds is all about adding that the enlightenment will assist to boost the industry.

    “We have 52 funds in 10 different sectors with the largest being the equity based ones which presently stands at 45. Between 2008 and 2009, all we had invested in funds was about N19billion, but as at last week, we had N152 billion,” Adebola said.

    He assured that FMAN would work with the SEC on enlightenment of the investing public which would translate into a bigger fund market in the country.

    Director, Collective Investment Scheme (CIS), Securities and Exchange Commission (SEC), Mrs Louisa Eni-Umukoro, had recently said SEC was considering review of the cost structure and expenses of mutual funds with a view to ensuring that more returns accrue to investors.

    She said the Commission was concerned about the expenses and costs relative to fund management.

    According to her, SEC is considering introducing a multi-fee class structure for the mutual funds alongside other measures to reduce costs.

    “We are looking at introducing a multi-fee class structure whereby the more you subscribed, the less you pay. It’s something we are going to work out with the fund managers,” Eni-Umukoro said.

    She said SEC is considering reviewing downward the current expense ratio ceiling of 5.0 per cent to discourage frivolous expenses by some managers warning that the Commission will start to publish expense ratios of mutual funds on its website.

    Eni-Umukoro said the apex capital market regulator has amended its rules and regulations to cut down expenses relative to fund management.

  • Mutual funds lose N36b in 10 weeks

    Mutual funds lose N36b in 10 weeks

    •Net assets drop to N117b

    Mutual funds are trailing the bearishness at the stock market as net assets of collective investment schemes (CIS) dropped by more than N36 billion within 10 trading weeks.

    Reports on assets of mutual funds collated by the Securities and Exchange Commission (SEC) and analysed by The Nation indicated that mutual funds have lost considerable value so far this year while they showed marginal growth over a year period. The performance of mutual funds generally appeared to fall below average benchmark performance at the Nigerian stock market.

    Mutual funds, otherwise known as collective investment schemes (CIS), are joint investment vehicles through which investors can pool funds and invest in chosen basket of securities under a professional management with a view to optimize returns and reduce risks.

    Net asset value is determined by subtracting total liabilities of a fund from its total assets. The net asset value can further be divided by the total number of units of the fund to determine the unit price.

    A mutual fund is usually categorized by the class of assets that forms the primary focus of its investments. Thus, there are equity funds, money market funds, bond funds, real estate funds, ethical funds and balanced funds among others.

    The latest report on mutual funds for the period ended March 14, 2014 showed that overall net assets of all mutual funds stood at N117.37 billion as against N153.54 billion recorded by the period ended January 03, 2014, indicating a drop of N36.2 billion over the 10-week period.

    The performance of mutual funds was adversely affected by the downtrend in the equities segment, which recorded a loss of 14.89 per cent during the period. According to the report, equity-based funds, which opened this year as the largest segment, dropped to a third place with a net assets value of N40.14 billion as against its value of N47.07 billion by January 03.

    Money market funds, which invest mainly in money market instruments such as treasury bills, shot up to the first position with net assets value of N48.02 billion compared with N27.25 billion that opened the period.

    Real estate funds sustained its second position with net assets of N43.81 billion, almost unchanged from N43.53 billion recorded at the beginning of the year. Bonds funds, with nine mutual funds, witnessed marginal increase from N15.52 billion to N15.96 billion.

    The downtrend in the equities market also impacted on balanced funds- mutual funds that seek to invest in a balanced mixture of equity and debt instruments; as net assets value for the segment dropped from N10.22 billion to N8.23 billion. Ethical funds, which also depend largely on equities, also dropped from N7.17 billion to N6.46 billion.

    Umbrella funds, which are run entirely by Stanbic IBTC Asset Management, dropped from N2.5 billion to N2.44 billion.

    UPDC Reit remained the largest mutual fund with marginal increase in net asset from N27.29 billion to N27.56 billion. Stanbic Money Market Fund, the second largest fund, also saw increase in net asset value from N19.71 billion to N22.37 billion while the FBN Money Market Fund placed third with net asset value of N22.04 billion.

    Extended analysis for a year period meanwhile showed marginal increase of N9.77 billion in net assets value of mutual funds between March 15, 2013 and March 14, 2014. By March 15, 2013, total net assets value of mutual funds stood at N107.60 billion. The number of mutual funds has also increased from 49 in March 2013 to 52 by March, this year.

    The latest report again underscored the hangover of the 2008-2009 capital market recession on mutual funds. The Nation’s return analysis of mutual funds’ value change based on the opening and closing bid prices for 2013 had indicated that nearly all listed mutual funds fell below average return by the ASI during the year. The bid price is the price that the fund manager is willing to purchase a unit of a mutual fund at a given period.

    Most mutual funds’ returns fell significantly below average returns by some equities’ groups including the top-level 30 most capitalized stocks, oil and gas sectoral index, industrial goods index and the NSE Lotus Islamic Index; all of which outperformed the benchmark index.

    Returns by mutual funds, which included equities, fixed-income and mixed funds, ranged from -1.61 per cent to 31.5 per cent. Out of the 21 mutual funds tracked by The Nation, five were static; one recorded a negative return while others recorded various gains.

    Afrinvest (West Africa) Equity Fund recorded a return of 31.5 per cent. Paramount Equity Fund posted a return of 28.7 per cent. Coral Growth Fund returned 25.9 per cent while Stanbic IBTC Nigerian Equity Fund recorded a percentage change of 2.7 per cent.

    Other mutual funds with positive returns included BGL Nubian Fund, 15.4 per cent; UBA Balanced Fund, 3.1 per cent; Stanbic IBTC Guaranteed Investment Fund, 9.2 per cent; Nigeria International Debt Fund, 6.9 per cent; BGL Sapphire Fund, 3.5 per cent; The Frontier Fund, 8.4 per cent; Coral Income Fund, 7.9 per cent; Lotus Capital Halal Investment Fund, 1.3 per cent; BGL Sapphire Fund, 3.5 per cent; UBA Money Market Fund, 2.7 per cent; Canary Growth Fund, 6.1 per cent while FBN Heritage Fund recorded a return of 8.6 per cent.

    Static mutual funds included Intercontinental Integrity Fund, now known as Access Integrity Fund, ARM Aggressive Growth Fund, Continental Unit Trust, Fidelity Nigfund and Legacy Fund.

    The main index at the NSE, the All Share Index (ASI)-a common value-based index that tracks all quoted equities, had recorded full-year return of 47.19 per cent in 2013 rising from its opening index for the year of 28,078.81 points to close the year at 41,329.19 points. The performance in 2013 significantly surpassed the much applauded return in 2012 when equities posted average return of 35.45 per cent, equivalent to capital gains of N2.44 trillion.

    Aggregate market capitalisation of all quoted equities on the Nigerian Stock Exchange (NSE) closed 2013 at N13.226 trillion as against its opening value of N8.974 trillion for the year. This represented a whooping increase of N4.252 trillion.

    Meanwhile, Director-General, Securities and Exchange Commission (SEC), Ms Arunma Oteh, has said the apex capital market regulator is concluding arrangements on a uniformed global reporting standard for mutual funds.

    According to her, SEC is favourably disposed to the adoption of the Global Performance Standards (GPS) as the uniform reporting format for mutual funds in order to enhance the outlook of mutual funds in Nigeria.

    “We have less than 200,000 who are leveraging into CIS funds to save and invest. There is clearly room for more to be done. We have about $1 billion of funds under management that is very small for a country of 167 million people. So the potential is enormous. One of the things we are looking at doing, hopefully we will be able to achieve it this year, is to make sure that we have a common standard for reporting on performance so that the investors can compare one from another,” Oteh said.

    The Fund Managers’ Association of Nigeria (FMAN) has also said it plans to establish a robust nationwide distribution platform that will make mutual funds available to the nooks and crannies of the country.

    President, Fund Managers’ Association of Nigeria (FMAN), Mr. Micheal Oyebola, said FMAN aims to raise the profile of Nigerian fund managers as well as promote and increase awareness of their expertise in managing segregated investment mandates and mutual funds.

    According to him, one of the key objectives of FMAN over the next two years is to establish a robust fund distribution platform for all SEC-registered fund managers.

    Oyebola, who is also the managing director and head of FBN Capital Asset Management, a member of FBN Holdings Plc, said while there is dearth of knowledge about the investment market, there has been increased penetration in recent period.

    “Investors are showing more interest in income generating mutual funds and so we do anticipate a trend in either existing mutual funds paying a dividend or investment houses launching dividend paying products,” Oyebola said.

  • Mutual funds underperform market average

    •Net assets hit N153.5b

    Investors in mutual funds received less than an average return at the Nigerian stock market in 2013 as most mutual funds recorded single-digit return and several others trailed overall market’s average return.

    The 2013 business year set the stock market on a new high with average full-year return of 47.19 per cent, its best performance since 2007. Aggregate market capitalization of all quoted equities on the Nigerian Stock Exchange (NSE) closed 2013 at N13.226 trillion as against its opening value of N8.974 trillion for the year. This represented a whooping increase of N4.252 trillion.

    The main index at the NSE, the All Share Index (ASI)-a common value-based index that tracks all quoted equities, recorded full-year return of 47.19 per cent rising from its opening index for the year of 28,078.81 points to close the year at 41,329.19 points. The performance in 2013 significantly surpassed the much applauded return in 2012 when equities posted average return of 35.45 per cent, equivalent to capital gains of N2.44 trillion.

    The Nation’s return analysis of mutual funds’ value change in based on the opening and closing bid prices for last year indicated that nearly all listed mutual funds fell below average return by the ASI during the year. The bid price is the price that the fund manager is willing to purchase a unit of a mutual fund at a given period.

    Most mutual funds’ returns fell significantly below average returns by some equities’ groups including the top-level 30 most capitalised stocks, oil and gas sectoral index, industrial goods index and the NSE Lotus Islamic Index; all of which outperformed the benchmark index.

    Returns by mutual funds, which included equities, fixed-income and mixed funds, ranged from -1.61 per cent to 31.5 per cent. Out of the 21 mutual funds tracked by The Nation, five were static; one recorded a negative return while others recorded various gains.

    Afrinvest (West Africa) Equity Fund recorded a return of 31.5 per cent. Paramount Equity Fund posted a return of 28.7 per cent. Coral Growth Fund returned 25.9 per cent while Stanbic IBTC Nigerian Equity Fund recorded a percentage change of 2.7 per cent.

    Other mutual funds with positive returns included BGL Nubian Fund, 15.4 per cent; UBA Balanced Fund, 3.1 per cent; Stanbic IBTC Guaranteed Investment Fund, 9.2 per cent; Nigeria International Debt Fund, 6.9 per cent; BGL Sapphire Fund, 3.5 per cent; The Frontier Fund, 8.4 per cent; Coral Income Fund, 7.9 per cent; Lotus Capital Halal Investment Fund, 1.3 per cent; BGL Sapphire Fund, 3.5 per cent; UBA Money Market Fund, 2.7 per cent; Canary Growth Fund, 6.1 per cent while FBN Heritage Fund recorded a return of 8.6 per cent.

    Static mutual funds included Intercontinental Integrity Fund, now known as Access Integrity Fund, ARM Aggressive Growth Fund, Continental Unit Trust, Fidelity Nigfund and Legacy Fund.

    Meanwhile, the net value of all registered mutual funds in Nigeria currently stands at about N153.54 billion, according to the latest filings by collective investment schemes.

    Latest report on assets of mutual funds collated by the Securities and Exchange Commission (SEC) showed that total net asset value of mutual funds recorded appreciable gain to close at N153.54 billion by January 3, this year; the current available data.

     

     

    The report indicated an increase of about N36 billion on the net assets of mutual funds over a five-month period, underlining a progressive trend that had seen mutual funds recovering with the bullish trend at the stock market. Previous reports had put net assets of mutual funds at N117.5 billion by July 26, 2013. Mutual funds’ net assets had stood at N87.27 billion on July 27, 2012.

    Mutual funds, otherwise known as collective investment schemes, are joint investment vehicles through which investors can pool funds and invest in chosen basket of securities with a view to optimize returns and reduce risks.

    Net asset value is determined by subtracting total liabilities of a fund from its total assets. The net asset value can further be divided by the total number of units of the fund to determine the unit price.

    A mutual fund is usually categorized by the class of assets that forms the primary focus of its investments. Thus, there are equity funds, money market funds, bond funds, real estate funds, ethical funds and balanced funds among others.

    According to the report, equity-based funds remain the largest and most populous investment schemes with 18 funds that accounted for N47.07 billion, about 30.7 per cent of the total net asset value of mutual funds.

    Real estate funds also sustained its second position with net assets of N43.53 billion; 28.4 per cent of total net assets of mutual funds.

    Money market funds, which invest mainly in money market instruments such as treasury bills, remained the third largest investment segment with net value of N27.25 billion. Bonds funds, with nine mutual funds, had net value of N15.52 billion.

    Further breakdown showed that investors’ values in balanced funds- mutual funds that seek to invest in a balanced mixture of equity and debt instruments; totaled N10.22 billion while the four ethical funds accounted for N7.17 billion. Umbrella funds, which are run entirely by Stanbic IBTC Asset Management, pooled N2.5 billion while the only Exchange Traded Fund (ETC) accounted for N280.05 million.

    UPDC Reit remained the largest mutual fund with net asset of N27.29 billion. Stanbic Money Market Fund was the second largest fund with net asset value of N19.71 billion. Stanbic IBTC Nigerian Equity Fund doubled as the third largest mutual fund and the largest equity fund with net asset value of N15.38 billion.

    About five per cent of investors in the Nigerian capital market engage in mutual funds, a paltry fraction that underlines the tendency of most retail investors to invest in the market directly.