Mutual Funds rose year-on-year, YoY, by 41.6% to N1.92 trillion in the eight months ended August 2023, from N1.354 trillion in the corresponding period of 2022. The increase is driven by the high interest rate on fixed income instruments and the upward performance of the stock market, as well as increased awareness on benefits of Mutual Funds. Vanguard’s findings from the Securities and Exchange Commission, SEC, data showed that Money Market Funds, MMF, led other Funds recording N885.6 billion and accounted for 44.62% of the total Fund’s value. It was trailed behind by Dollar Funds posting N555.450 billion and accounted for 28.97% of the total value of the Mutual Funds. Bond/Fixed Income Fund occupied the third position posting N320.687 billion and represented 16.72% of the total value of Mutual Funds. Mutual Funds are professionally managed funds by asset management firms that pool funds from a group of people that are in low, medium and high classes and invest their money in venture capital, portfolio of stocks, bonds and other securities.
Reacting on the growth in Mutual Funds, 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.”
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.
So this is why major investors are moving to Mutual Funds due to the high yield and considering the rising inflation when compared to other investments in the financial markets.”
Commenting on the rising profile of Mutual Funds, Analyst and Vice Executive Chairman, HighCap Securities Limited, David Adonri, said: “The growth in NAV of Mutual Funds is impressive as it over-performed the equities market which grew by 25.53% within the period under review. It is around the same range as average yield on bonds which means that the funds were managed conservatively. They may have been weighted more towards debt.
“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/2023/10/mutual-funds-investment-rises-41-6-to-n1-9-trn-in-8-months/