Col­lec­tive in­vest­ment schemes grew 48% in 2018

Business a.m. - - FINANCE & INVESTMENT -

THE NET AS SET VALUE (NAV) of to­tal col­lec­tive in­vest­ment schemes in Nige­ria grew by 48 per­cent from Jan­uary 2018 to Novem­ber 2018.

The to­tal NAV which stood at N440.8 bil­lion as at 5th Jan­uary 2018, ended at N650.6 bil­lion as at 2nd Novem­ber 2018. This is ac­cord­ing to data ob­tained by our cor­re­spon­dent from trad­ing ac­tiv­i­ties mon­i­tored by the Nige­rian Se­cu­ri­ties and Ex­change Com­mis­sion (SEC).

Col­lec­tive in­vest­ment schemes (CIS) in Nige­ria com­prise of eth­i­cal funds, mixed funds, fixed in­come funds, eq­uity-based funds, real es­tate funds, money mar­ket funds and bond funds.

These funds help in­vestors to en­joy the ben­e­fits of di­ver­si­fi­ca­tion and pro­fes­sional man­age­ment of their fund at low cost. It also aids the deep­en­ing of the Nige­rian cap­i­tal mar­ket.

Mary Uduk the act­ing di­rec­tor gen­eral, SEC in a re­cent in­ter­view ad­vised re­tail in­vestors in the coun­try to em­brace CIS as a means of re­duc­ing the risk ex­po­sure of in­vest­ing in the Nige­rian Fi­nan­cial mar­ket.

Ac­cord­ing to her, in­vestors should get their fi­nan­cial ad­vis­ers to ad­vise them prop­erly on where to in­vest, while re­tail in­vestors who in­vest in Col­lec­tive In­vest­ment Schemes and Mu­tual Funds will be re­duc­ing their risks be­cause these in­vest­ment port­fo­lios are man­aged in­de­pen­dently by pro­fes­sion­als and they are di­ver­si­fied thereby re­duc­ing risks.

The In­vest­ments and Se­cu­ri­ties Act (ISA) de­fines Col­lec­tive In­vest­ment Scheme as “a scheme in what­ever form, in­clud­ing an open-ended in­vest­ment com­pany, in pur­suance of which mem­bers of the pub­lic are in­vited or per­mit­ted to in­vest money or other as­sets in a port­fo­lio, and in terms of which, two or more in­vestors con­trib­ute money or other as­sets to and hold a par­tic­i­pa­tory in­ter­est.

The in­vestors in a CIS share the risk and ben­e­fit of in­vest­ment in pro­por­tion to their par­tic­i­pa­tory in­ter­est in a port­fo­lio of a scheme or on any other ba­sis de­ter­mined in the deed, but not a col­lec­tive in­vest­ment scheme au­tho­rised by any other Act, the ISA fur­ther ex­plained.

A per­for­mance re­view of each fund that makes up the CIS re­vealed that four of the funds grew dur­ing the pe­riod while three re­tracted. The fixed in­come funds were the best per­form­ing funds for the pe­riod, hav­ing grown by 108 per­cent from N26.7 bil­lion in Jan­uary to N55.6 bil­lion in Novem­ber.

Money mar­ket funds were the next best per­form­ers as a 58 per­cent growth was recorded in the re­view pe­riod. The funds in­creased to N492 bil­lion in Novem­ber from N312 bil­lion recorded in Jan­uary.

Bond funds fol­lowed the sim­i­lar pos­i­tive tra­jec­tory to emerge third with a 44 per­cent growth from N9.5 bil­lion in Jan­uary to N13.7 bil­lion as at Novem­ber. Real es­tate funds ad­vanced by 4 per­cent to N47.3 bil­lion as at Novem­ber 2018 this was in con­trast to its Jan­uary 2018 value of N45.6 bil­lion.

The CIS that slacked in the course of the re­view pe­riod were eq­uity-based funds, mixed funds and eth­i­cal funds which fell by 15 per­cent, 9 per­cent and 7 per­cent re­spec­tively.

Uduk said the SEC will live up to its re­spon­si­bil­i­ties on in­vestor pro­tec­tion, as she urged share­hold­ers to mon­i­tor their in­vest­ments in the cap­i­tal mar­ket.

Re­it­er­at­ing the need to grow the mar­ket, the SEC act­ing DG dis­closed in her in­ter­view that the apex reg­u­la­tor is mak­ing con­certed ef­forts in col­lab­o­ra­tion with cor­po­rate af­fairs com­mis­sion (CAC) and other stake­hold­ers to as­sist pub­lic com­pa­nies that are yet to regis­ter their se­cu­ri­ties to do so with­out much dif­fi­culty, so as to en­able trad­ing in se­cu­ri­ties on un­listed pub­lic com­pa­nies.

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