The Securities and Exchange Commission (SEC) has disclosed that Nigeria’s mutual funds attracted N520 billion in contributions in 2019.
This automatically makes That makes 2019 the highest yearly contribution ever.
The gigantic amount of contributions that the industry recorded in 2019 is not unconnected with the increase in awareness, occasioned by the numerous publications on mutual funds as well as enlightenment campaigns and advertisements by bloggers and fund managers.
Another factor that might have contributed to the increased contribution is the search for yield.
The overall stock market was not that good in 2019, in fact, the Nigeria All Share index made a loss.
The lackluster performance of the stock market pushed some investors to mutual funds, especially money market funds, thereby leading to increase in contributions to such funds.
Money market funds continue to be the darling of Nigerian mutual fund investors and the heartbeat of the industry.
This resulted in much of the contributions making their way into money market funds. Among the three funds that attracted the highest contributions in 2019, Stanbic IBTC money market fund generated the highest contribution of N117.7 billion while FBN Money market fund gathered N109.6 billion in contributions.
Stanbic IBTC Dollar fund is the only non-money market fund that made it to the top 3 with a contribution of N59.4 billion.
In all, money market funds saw a total contribution of N364.17 billion representing about 70% of the entire new money that was poured into mutual funds in 2019.
Motivated by the desire to hedge against the depreciation of the local currency, the Nigerian Naira, investors seem to be getting to know and embrace Nigeria’s Euro bond funds, or funds that are denominated in foreign currency.
The Euro Bond fund category generated a total contribution of N77.07 billion.
As noted already, Stanbic IBTC Dollar fund recorded the highest contribution in this category with N 59.4 billion.
Currently, there are 7 Eurobond funds in Nigeria, according to the SEC NAV Summary Report.
One advantage of investing in foreign-denominated mutual funds is that investors stand to gain not only from the performance of the funds but also from exchange rate changes.
Another category of mutual funds that attracted a sizable amount of new investments is Bond or Fixed Income funds.
This category of mutual funds took in N44.47 billion in fund inflows, thanks to Stanbic IBTC bond fund that generated N10.88 billion to place itself on the record as the bond fund with the highest contribution in 2019.
Abacus Money market fund and Stanbic IBTC money market funds also witnessed an elevated amount of redemptions in the sums of N10.6 and N9.8 billion respectively.
Just like money market funds recorded the highest amounts of contributions, they also suffered the highest amount of redemptions, although in no proportionate terms.
The industry ended the year 2019 with net positive flow of N380.5 billion, to hit an all-time high of N1.042 trillion in asset value, placing the industry on a better footing for the future.