Market News

By Peter Egwuatu

The fascination for foreign currency, specifically the US Dollar, has driven investors towards dollar denominated financial assets in the Mutual Funds segment resulting to a growth rate of 79.4 % Year-on-Year, YoY ended December 27, 2024.

The Funds hit N3.829 trillion, up from N2.134 trillion in the corresponding period of 2023.

This growth rate is also coming at the backdrop of the high interest rate on fixed income instruments and the upward performance of the stock market, as well as increased awareness on benefits of Mutual Funds.

Vanguard’s findings from the recent data released by the Securities and Exchange Commission, SEC, yesterday, showed that Dollar Funds led other Funds recording N1.708 trillion and accounted for 44.6% of the total Fund’s value.

It was trailed by Money Market Funds posting N1.680 trillion and accounted for 43.89% of the total value of the Mutual Funds.

Bond/Fixed Income Fund occupied the third position posting N196. 299 billion and represented 5.13% of the total value of Mutual Funds.

Meanwhile, Vanguard’s findings also revealed that equity base funds recorded the highest yield Year to Date, YtD , with Halo Asset Management Limited recording 98.91% . It was followed by another equity based funds from SCM Capital Limited posting 63.74%  yield YtD, while Valu Alliance, a  Balanced Funds of the Mutual Funds recorded 54.01% yield YtD.

Mutual Funds are professionally managed funds by asset management firms that pool funds from a group of people that are in low, medium and high classes and invest their money in venture capital, portfolio of stocks, bonds and other securities.

Commenting on the growth in Mutual Funds, Michael Oyebola, the Chief Executive Officer, MoneyCounsellors, said: “The Nigerian Mutual Fund landscape has evolved significantly over the past few years, transforming into a vibrant and accessible investment platform for both retail and institutional investors.

Mutual funds pool money from various investors and invest in a diversified portfolio of securities, providing investors with an opportunity to participate in the financial markets without needing extensive knowledge or experience. The substantial growth in the Mutual Fund industry can be attributed to various factors; including some level of increased financial literacy among the population as well as the ongoing bull market that have also encouraged investors to seek higher returns through Mutual Funds investments.”

Victor Chiazor, Head of Research and Investment at FSL Securities Limited, said: “The major reason any investment is made by organisations or individuals is for return on investment (ROI). 

Once yields on any investment drops, the rationale thing for any investor to do is to search for higher yielding assets and rebalance their portfolio. Again, the monetary policy of the CBN is in favour of fixed securities given the persistent Monetary Policy Rate, MPR  hike of the by the apex bank to tame inflation”.