How fixed income mutual funds have performed by annualized return this year

Fixed income mutual funds has seen strong investor appetite, with yields among the most attractive in emerging markets. Assessing the portfolio value of the seven asset classes of recognized mutual funds revealed that fixed income funds outperformed six others to appreciate 57 percent to N90.7 billion for 19 July, 2019 week-end, since the start of the year. Figures from the Securities and Exchange Commission (SEC) show.

This compares with bond funds that grew 49 percent, money market funds (+21%), real estate funds (+5%), ethical funds (-10%), mixed funds (-3%) and equity (-10%).

Fixed income funds buy investments that pay a fixed rate of return like government bonds, investment grade corporate bonds and highgrade corporate bonds. They aim to have money coming into the fund on regular basis, mostly through interest that the fund earns.

Presently, there are 18 fixed income funds registered with the Securities and Exchange Commission (SEC). This asset class accounts for about 12 percent of total asset under management (AUM) worth N786 billion.

Businessday computed the annualized return of 16 fixed income funds (for comparison sake), and rank them based on their returns.

The analysis revealed that 11 funds delivered gains to investors, four lost and one remained unchanged.

For context, annualized rate is a rate of return for a given period that is less than one year but computed as if the rate were for a full year. It is computed on time-weighted basis. The funds are ranked as follows:

ACAP Income Fund

This fund is an open-ended mutual fund under the management interest of Alternative Capital Limited Partners. Yearlong, the unit price of the fund appreciated 23 percent to N0.76 for week ended July 19, 2019 since the start of the year, with annualized return of 42.3 percent outpacing inflation figure of 11.22 percent.

The portfolio value of the fund has surged some 40 percent to N220.35 million as at July 19-end, from N157.5 million at January 4 2019-end.

Stanbic IBTC Absolute Fund

This fund is a subset of Stanbic IBTC Umbrella Fund managed by Stanbic IBTC Asset Management Limited. It is specially designed for risk averse investors as it allocates 100 percent of assets to fixed income securities.

The unit price of the fund has appreciated 8 percent since the year’s start to N3, 528.76, with annualized return at 14.1 percent above current inflation rate. The fund’s asset value has expanded 3.3 percent to N13.06 billion as at July 19-end, from N12.64 billion at January 4, 2019.

Zenith Income Fund

This fund is an open-ended mutual fund managed by Zenith Asset Management Limited. The fund is designed for investors with low risk tolerance, and invests mostly in high grade fixed income instruments.

The fund’s price per unit has gained 7.6 percent year-to-date, with annualized return of 13.38 percent above inflation figure. Portfolio value of the fund has appreciated by 10.2 percent to N1.04 billion as at July 19 week ended from N943.7 million at January 4.

Coral Income Fund

This is an open-ended fund managed by FSDH Asset Management Limited, with the intent of preserving capital and achieving stable and consistent income flows. The fund invests at least 70 percent in fixed income securities and other interest bearing securities as well as other equity securities quoted on Nigerian Stock Exchange.

The fund’s unit price gained 7.6 percent year to date as it appreciated to N2, 946.17 as at week ended July 19 from N2, 764.34 at January 4 week ended, with annualized return at 11.58 percent. Also, the asset value of the fund has surged some 19 percent to N3.5 billion within the reviewed timeline.

Coronation Fixed Income Fund

This fund, managed by Coronation Asset Management has a low to medium risk profile. It invests in a broad portfolio of fixed income securities such as government and corporate bonds, treasury bills and other money market instruments.

The fund’s price per unit has appreciated to N1.2 as at July 19-end from N1.12 at January 4-end, representing year-to-date and annualized return at 6.6 and 11.58 percent respectively. Portfolio value of the fund has appreciated by 9.5 percent to N360.16 million as at July 19 week ended from N328.85 million at January 4.

Legacy Debt Fund

This is a relatively low risk and open-ended mutual fund that invests in money market and shortterm maturity bonds. The fund is managed by First City Asset Management Limited. The fund gained 6.5 percent between January 4 –July 19, 2019 as unit price rose to N3.46 from N3.25.