Interest rate, others drive up investments in Mutual Funds by 89.12%
Investors have stepped up bullish position on the Mutual Funds investment window pushing the total Net Asset Value, NAV, Year-on-Year, YoY, to N3.826 trillion in November, 2024, about 89.12% growth over N2.023 trillion in the corresponding period 2023.
Mutual Fund is a professionally managed investment window that pools money from many investors and invests same in stocks, bonds, and short-term debt on behalf of the subscribing investors.
Analysts noted that the major driving force is the monetary policy rate increases by the Central Bank of Nigeria, CBN, which has created high yields in money market instruments.
Latest data released by the Securities and Exchange Commission, SEC, showed that Fixed Income Funds was the most attractive among other Funds in the review period. It recorded N1.807 trillion, accounting for 47.21% of the total NAV of the Mutual Funds.
The Money Market Funds trailed with N1.568 trillion and accounted for 40.9% of the total NAV, while Bond/Fixed Income Funds occupied the third position posting N211.308 billion, representing 5.52% of the NAV.
Commenting on the performances of the Funds, Michael Oyebola, the Chief Executive Officer, MoneyCounsellors said: “The monetary policy reform has seen interest rates on steady rise this year. Also the increased awareness on the part of the ordinary investors as well as foreign investors’ attraction of the exchange rate policy has helped to drive more investment in Mutual Funds and stock market generally.”
He stated further: “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. 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 have also encouraged investors to seek higher returns through Mutual Fund investments.”
Commenting on the rising profile of Mutual Funds, Analyst and Vice Executive Chairman, HighCap Securities Limited, David Adonri, said: “The future of Mutual Funds in comparison with other financial instruments is reasonably bright. They have their captive market which is the retail investment market.
“Additionally, Mutual Funds are plentiful and structured to meet the differentiated needs of investors. Each Fund targets the risk tolerance of its investor group.
“Their usefulness as portfolio diversification tool is unmatched in the capital market. They deal reasonably well with unsystematic risks and hence reliable tool for risk management. They are generally for passive investors but foreign investors have joined because of the attractive yield”.
