Collective investment schemes grew 48% in 2018
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.