Net Asset Value of Mutual Funds rose 47 per cent, year on year, to N2.019 trillion, the highest in 12 years, driven by investors’ quest for high yields amidst the prevailing high interest rate regime.
Vanguard’s findings from the report released by the Securities and Exchange Commission, SEC, showed that the total NAV of the Mutual Funds Year on Year, YoY rose by N653 million or 47.8% to N2.019 trillion in on November 17, 2023 from N1.366 trillion in November 18,2022. The Asset Under Management AuM at N2.019 trillion is the highest since 2011 when the SEC started publishing the data.
Meanwhile, the Central Bank of Nigeria, CBN, has been raising the Monetary Policy Rate, MPR, which is the benchmark interest rate for borrowing following the continuous rise in inflation. This high interest rate favours the Mutual Funds investors.
The rapid growth in the Mutual Funds was skewed towards the high yielding Money Market Funds, Dollar/Fixed Income Funds, and Bond/Fixed Income Funds. They accounted for 42.96 %, 32.27% and 14.45% of the total NAV respectively.
The three Funds recorded an average yield YtD of 25.7%, 14.6 % and 19.12% respectively.
The NAV of Money Market Funds stood at N869.350 billion, followed by Dollar/Fixed Income Funds N652.996 billion and Bond/Fixed Income Funds N292.383 billion to occupy the top three positions in the chart during the period under review.
Reacting to the increase in Mutual Funds’ assets, Analyst and Head of Research at FSL Securities Limited, Victor Chiazor, said: “Time is money as they say, and the truth is many investors simply do not have the time to spend hours researching and buying individual stocks. Mutual funds are managed by professional managers who have the resources, tools and expertise to do all the research you need. Also investors would want to invest in high yielding instruments and that is why the assets of Mutual Funds are rising.”