Amidst rising yields in mutual fund investments, recent report has shown that more investors are now moving their funds to this class of assets prompting sharp rise in the portfolio.
Vanguard’s findings indicated that the total value of investments in Mutual Funds rose Year-on-Year, YoY, by 41.2% to N2.1 trillion in the10 months ended 20th October 2023 from N1.5 trillion in the corresponding period of 2022.
The increase is driven by the high yield on Money Market Funds, fixed income Funds and Bonds Funds and the upward performance of the stock market, as well as increased investment awareness.
Vanguard’s findings from the data released by the Securities and Exchange Commission, SEC showed that Money Market Funds, MMF, led the growth recording N885.7 billion and accounted for 43.39% of the total Mutual Fund’s value.
It was followed by Income Funds posting N631.778 billion and accounting for 31.55% of the total value of the Mutual Funds.
Bond/Fixed Income Fund occupied the third position posting N297.314 billion representing 14.85% of the total value of Mutual Funds.
The breakdown on the rate of returns shows that the average yield of Money Market Funds stood at 27%, Fixed Income 13.7% and Bond /Fixed Income Funds 22.34% during the period under review.
Commenting on the development in the Mutual Funds market, Michael Oyebola, the Chief Executive Officer, MoneyCounsellors, said: “The Nigerian mutual fund landscape has evolved significantly over the past few years, transforming into a vibrant and accessible investment platform for both retail and institutional investors.
Mutual funds pool money from various investors and invest in a diversified portfolio of securities, providing investors with an opportunity to participate in the financial markets without needing extensive knowledge or experience. The substantial growth in the mutual fund industry can be attributed to various factors; including some level of increased financial literacy among the population as well as the ongoing bull market have also encouraged investors to seek higher returns through mutual fund investments.”
Commenting also, Victor Chiazor, Head of Research and Investment at FSL Securities Limited, said: “The major reason any investment is made by organisations or individuals is for return on investment (ROI). Once yields on any investment drops, the rationale thing for any investor to do is to search for higher yielding assets and rebalance their portfolio”.
Commenting on the rising profile of Mutual Funds, analyst and Vice Executive Chairman, HighCap Securities Limited, David Adonri, said: “The yield in NAV (Net Asset Value) of Mutual Funds is impressive, though the return for equities market in the 10 months stood at 35.09%. The high interest regime and the recent monetary reforms by the present administration have also contributed immensely to attract investors into the market.”
Source: https://www.vanguardngr.com/2023/11/more-investments-move-to-mutual-funds-as-value-rises-41-2/