By Alex C
The huge growth witnessed in the asset value of mutual funds or Collective Investment Scheme (CIS) in Nigeria was driven largely by asset growth in real estate and money market funds. The active collective investment vehicles that are regulated by the Securities and Exchange Commission (SEC) are equity-based fund, money market fund, bond fund, real estate fund, balanced-based fund, ethical fund, umbrella fund, and exchange-traded fund (ETF).
While the asset value of these funds grew from N107.45 billion as at January 25, 2013 to N155.642 billion as at January 31, 2014, asset value of money market fund grew from N15.075 billion to N30.713 billion, and real estate fund recorded remarkable growth from N15.922 billion to N43.382 billion within the same period.
Money market funds invest in short-term (less than one year to maturity) corporate and government debt securities such as treasury bills, guaranteed commercial papers, bankers’ acceptances, and certificate of deposits.
Currently, funds that make up the basket of money market fund are StanbicIBTC money market fund, FBN money market fund, UBA money market fund, and ARM money market fund. The number of funds in the real estate fund grew from two to three, which are Skye shelter fund, Union Homes REITs, and UPDC Real Estate Investment Trusts.
Recent regulatory push for investors to approach the securities markets through mutual fund results from its advantages compared to direct investing in individual securities.
Equity funds, as the name implies, invest primarily in equities of listed companies. The equity-based funds that had their value eroded are Stanbic IBTC Nigerian Equity Fund, ARM Discovery Fund, Coral Growth Fund, Nigeria International Growth Fund, Legacy Fund, IMB Energy Master Fund, Frontier Fund, Denham Management Millennium Fund, Paramount Equity Fund, UBA Equity Fund, ARM Aggressive Growth Fund, ACAP Canary Growth Fund, Anchor Fund, Bedrock Fund, Zenith Equity Fund, Afrinvest Equity Fund, BGL Nubian Fund, and SIM Capital Alliance Fund.
Investors staking their money in related securities in mutual funds have access to increased diversification among available instruments, daily liquidity, service and convenience, regulatory oversight, ease of comparison, and professional investment management. They are also able to participate in investments that may be available only to larger investors.