Mutual funds asset in record high of N777bn on demand for low-risk instruments

…as fixed income, money market, bond funds report most growth

Increase in investors’ appetite for the less risky mutual fund instruments has driven the asset under management (AUM) to a record high of N777.92 billion in the trading week to July 12, the latest data by the Securities and Exchange Commission (SEC) showed.

The asset managed by Nigerian mutual fund appreciated by N700.25 billion from Net Asset Value (NAV) of N77.67 billion reported in August 2011, when the industry regulator started collating the data, to N777.92 in July, fuelled by a joint 118.16 percent increase in investments into fixed income, money market and bond funds.

“These funds – which are perceived to be low-risk alternatives to other more traditional asset classes, account for over 70 percent of collective investment schemes and 25 percent of non-pension assets under management,” Agusto & Co., a Lagos-based ratings agency, said.

According to the SEC data analysed by Businessday, total asset controlled by the mutual fund managers ap

preciated year-t0-date by 20.69 percent, a NAV increase by N133.36 billion from N644.56 billion in January 2019 to N777.92 billion for the month under review.

Commenting on the performance, Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers, said investment education is rapidly gaining grounds in the country which has seen many people beginning to develop investment culture.

“The surge being driven by fixed-income, moneymarket and bond funds is majorly on the back of risk characteristics of the Nigerian populace. Also, when you look at the disappointing streak of the equities market, it definitely discourages people from investing in equity funds,” Akinloye said.

Mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.