- Mutual Funds’ Net Assets Hit N551.7b
The net value of all registered mutual funds in Nigeria has risen to N551.7 billion, according to latest data provided by the Securities and Exchange Commission (SEC). This represented significant increase of some 400 per cent over the past five years.
Latest statistical report on net asset values (NAV) of mutual funds by SEC obtained by The Nation showed that Nigeria’s 74 registered mutual funds have total net asset value (NAV) of N551.7 billion by the close of business on April 20, 2018. Total net asset value of all mutual funds had stood at N87.27 billion by 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 optimise 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 categorised 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 showed a major paradigm shift in the historical preference for mutual funds with money market funds overtaking equity-based funds as largest investment segment.
According to the report, money market funds, which invest mainly in money market instruments such as treasury bills, account for about 74.2 per cent of the total net asset value with N409.25 billion. Real estate funds accounted for N45.87 billion, representing 8.31 per cent of the total net asset value. Fixed income funds’ NAV stood at N N37.55 billion, accounting for 6.80 per cent of the total NAV.
Further breakdown showed that investors’ values in mixed or balanced funds- mutual funds that seek to invest in a balanced mixture of equity and debt instruments, totaled N28.32 billion, representing 5.13 per cent of the total NAV.
Equity-based funds, which hitherto dominated as the largest and most populous investment schemes, accounted for N15 billion, about 2.72 per cent of the total net asset value of mutual funds. Bonds funds recorded net asset value of N9.99 billion, representing 1.81 per cent of the total NAV while ethical funds-which invest based on religious and social values, accounted for 1.04 per cent of the total NAV with a net value of N5.73 per cent.
Stanbic IBTC Asset Management Limited (SIAML) remains the largest investment management firm in Nigeria with its funds dominating major segments of the market. Stanbic IBTC Money Market Fund is the largest CIS with NAV of N215.12 billion, representing 52.56 per cent of the NAV for its segment.
Also, Stanbic IBTC Nigerian Equity Fund is the largest equity-based fund with NAV of N7.27 billion or 48.5 per cent of the NAV for its segment. Stanbic IBTC Absolute Fund (Sub Fund) is the largest fixed income funds with NAV of N11.8 billion or 31.4 per cent of the segment NAV.
FBN Fixed Income Fund is, however, the largest bond fund with NAV of N5.3 billion, representing 53 per cent of the segment.
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.