Funds Management
In its latest announcement, Mutual Benefit breaks a major dividend rule
Insurance firm, Mutual Benefits Assurance, late Friday released its financial statements for the year ended December 2017.
Gross premium written increased from N12.1 billion in 2016 to N14.1 billion in 2017. The company made a profit before tax of N1.3 billion, as against a loss before tax of N1 billion. Profit after tax was also positive at N1 billion as against a N1.3 billion loss incurred in the prior year.
Earnings per share was also positive at 13 kobo as against a loss of 17 kobo in 2016.
The company has also proposed a final dividend of 2 kobo, its first in nearly a decade, amounting to a payout ratio of 15.3% The company last month hinted at the possibility of a dividend payment.
Possible breach of rules?
Companies are barred from paying dividends while they have negative retained earnings or accumulated losses. At the group level, Mutual Benefits has accumulated losses of N1 billion, while at the company level, it also has accumulated losses of N2.2 billion.
We also rummaged through the interim report to see if there was any regulatory approval or court-ordered payment of dividends, we found none. There was also no cases of revenue from discontinued operations from which the company could pay dividends indicating that the dividend is not as a result of an extraordinary income.
There was also no court ordered set off of accumulated losses against share premium of the company, which could have paved the way for dividends.
One wonders why the shareholders of the company granted it approval to pay a dividend despite these losses. This singular act is a break from the rule.
Implications of the action
- While shareholders may be happy that the dividend drought is over, the dividend itself is minuscule for the average retail investor.
- However, other insurance companies in similar circumstances could also qualify for dividend payment.
- It will also be the first time we have seen a company declare dividends out of accumulated profits suggesting that NAICOM may not be as thorough as perceived in reviewing financial statements.
Mutual Benefits Assurance closed at N0.28 on Friday’s trading session on the NSE, down 3.45%. Year to date, the stock is down 44%.
About Mutual Benefits Assurance
Mutual Benefits Assurance Plc was incorporated on the 18th day of April 1995 under the name, Mutual Benefits Assurance Company Limited. The company was converted and re-registered as a public limited liability company on 24th May 2001. On 28th May 2002 the company became listed on the Nigerian Stock Exchange (NSE).
The group is mainly involved in general and life insurance underwriting (under separate licenses held by the company and its subsidiary respectively), risk management and provision of financial services.
The company has six subsidiary companies namely:
Mutual Benefits Life Assurance Limited, Mutual Benefits Assurance Co. Liberia, Mutual Benefits Assurance Niger SA, Mutual Benefits Homes and Properties Ltd and Mutual Benefits Microfinance Bank Limited.
Exclusives
Best performing Mutual Funds in February 2021
Nairametrics reviews the best Mutual Funds in the month of February 2021, judging by their performance.
Data obtained from the Security and Exchange Commission (SEC), showed that only 25 mutual funds out of the 118 registered funds in the month of February recorded price gains in the period.
Mutual funds have always been considered as a good alternative investment opportunity, particularly for retail investors because it gives them access to diversified and professionally managed portfolios at a low price.
After delivering an impressive growth of 51.6% in 2020 and kicking off 2021 with a marginal decline of 0.13% in January, the total net asset value of the registered mutual funds also declined further by 0.94% between January and February 2021.
According to SEC, the total net asset value of the 118 registered mutual funds in Nigeria was N1.56 trillion across the 9 mutual fund types offered as of February 26, 2021.
READ: Top 5 Fund Managers in Nigeria by asset value
A comparison of the performance of the fund types month-on-month indicated that despite the fall in total net asset value at the end of February, real estate bonds’ net asset value grew by 17.48%, exchange traded bonds by +11.72%, fixed income funds by +5.27% while the bond funds grew by +1.26%. The infrastructure bonds sustained their value in January, recording no change in the month. Other funds recorded losses with the money market fund recording the highest loss of 7.09% in net asset value during the month.
It is also worthy of note that out of the 118 registered mutual funds, only 32 mutual funds had increased in net asset value between January and February 2021 while only 25 mutual funds had increased in unit price.
Below are the top-performing mutual funds in the month of February 2021. We also highlighted their performance in terms of returns and changes in net asset value and included profiles of the funds as described on their websites.
READ: Nigeria’s mutual fund asset value hits N1 Trillion
FBNQuest Asset Management Limited – Retail (Bond Funds)
The FBN Nigeria Eurobond is a fixed income mutual fund that invests in the US Dollar-denominated debt instruments issued by the Nigerian government and reputable corporate institutions. Investments can be made into this fund by both retail and institutional investors.
To get started as a retail investor, a minimum investment of $2,500 is required and the minimum holding period is 180 days.
January 29, 2021
Fund Price – N49,736.31
February 26, 2021
Fund Price – N51,765.35
Return – 4.08%
Ranking – Fifth
Commentary: The retail bond fund package of FBNQuest Asset Management Limited performed as the fifth-best fund in February 2021. The unit price appreciated by 4.08%, closely behind the growth of the institutional bond fund managed by the same asset manager.
The net asset value of the fund increased by 7.81% from N4.62 billion as of 29th January 2020, to N4.98 billion as at end of February 2021.
READ: Naira falls across forex markets as CBN suggests official rate has been adjusted
FBNQuest Asset Management Limited – Institutional (Bond Funds)
The FBN Nigeria Eurobond (USD) designed for institutional investors is also invested in US Dollar-denominated debt instruments issued by the Nigerian government and reputable corporate institutions and managed by FBNQuest Asset Management Limited.
To begin investment as an institutional investor, a minimum of $100,000 is required for a minimum tenor of 180 days.
January 29, 2021
Fund Price – N49,681.06
February 26, 2021
Fund Price – N51,712.01
Return – 4.09%
Ranking – Fourth
Commentary: The FBNQuest Asset Management Limited bond funds created for institutional investors is the fourth in the list best performing fund in the month of February, growing its unit price by 4.09% and net asset value by 4.41% from N578.37 million in January 2021 to N603.85 million in February 2021.
READ: Investors pump N7 billions into New Gold ETF
Nova Dollar Fixed Income Fund (Fixed Income Fund) – Novambl Asset Management
Nova USD Fixed income fund is an actively managed open-ended unit trust scheme managed by Novambl Asset Management. The fund has an asset allocation range target of 0% – 80% on sovereign Eurobonds, 0% – 80% on corporate Eurobonds, 0% – 50% on money market instruments and finally 0% – 5% on Cash.
The issue price is $100 per unit and the minimum initial investment for the offer is 5 units of the funds, while additional/subsequent investments will be issued in multiples of 5 units and payable in full, upon subscription.
January 29, 2021
Fund Price – N393.57
February 26, 2021
Fund Price – N410.23
Return – 4.23%
Ranking – Third
Commentary: Nova dollar fixed-income fund, managed by Novambl Asset Management Ltd, recorded unit price appreciation of 4.23% from N393.57 in January 2021 to N410.23 in February 2021. The fund’s net asset value also increased by 4.17% from N122.95 million as of 29th January 2021 to N128.08 million at end of February 2021.
United Capital Euro Bond Fund – United Capital Asset Management Limited (Bond Funds)
The United Capital Nigerian Eurobond Fund is an open-ended mutual fund that invests in dollar-denominated euro bonds, floated by the Federal Government of Nigeria, Nigerian top-tier banks, and corporates.
Investors can start with a minimum of 10 units, with each unit costing $100 and multiples of 5 units can be purchased thereafter.
January 29, 2021
Fund Price – N46,347.64
February 26, 2021
Fund Price – N48,466.73
Return – 4.57%
Ranking – Second
Commentary: The euro bond fund owned by United Capital Asset Management Ltd recorded a unit price growth of 4.57% in February 2021. The net asset value however declined by 3.61% from N29.74 billion as of 29th January 2021, to N28.67 billion at the end of February 2021.
Stanbic IBTC Dollar Fund – Stanbic IBTC Asset Management Limited (Fixed Income Funds)
Stanbic IBTC Dollar Fund (SIDF) is an open-ended fund launched in January 2017. The fund invests a minimum of 70% of its portfolio in high-quality Eurobonds, a maximum of 25% in short-term USD deposits, and a maximum of 10% in USD equities.
The expense ratio of the fund is 1.5%. The minimum investment amount is $1,000 while additional investments is $500. All investments must be held for a minimum period of 180 days.
January 29, 2021
Fund Price – N485.29
February 26, 2021
Fund Price – N507.73
Return – 4.62%
Ranking – First
Commentary: This is a dollar fund by Stanbic IBTC Asset Management Limited, which led the list of best-performing mutual funds in the month, appreciating by 4.62% in February.
Also, the net asset value as of 26th February 2021, was N119.23 billion indicating a growth of 3.50% when compared to N115.20 billion recorded as of January 29 2021.
Bubbling under…..
The following are the other top 10 performing funds on our lists in ascending order:
Lotus Capital Fixed Income Fund – Lotus Capital Limited (Fixed Income Fund)
Return – 0.68%
Anchoria Equity Fund – Anchoria Asset Management Limited (Equity-Based Funds)
Return – 0.77%
SFS Fixed Income Fund – SFS Capital Nigeria Limited (Fixed Income Funds)
Return – 1.00%
Cordros Dollar Fund – Cordros Asset Management Limited (Fixed Income Funds)
Return – 1.51%
ARM Discovery Balanced Fund – Asset & Resources Management Company Limited (Mixed Funds)
Return – 1.58%
Funds Management
Best Pension Funds in Nigeria for the month of February 2021
Nigerian Pension Fund administrators in the month of February across the different funds dipped significantly in February 2021
The performance of most Nigerian Pension Fund administrators in the month of February across the different funds dipped significantly as only 22% of the funds recorded positive growth in the month.
- This is according to data tracked by Nairalytics Research on the fund performance released on the websites of the PFAs.
- The overall downturn in the review month came on the back of the significant positive performances churned out in the previous year, despite the effects of the pandemic on the global economy.
Nairametrics considered the prices of the different RSA funds as of 31st January 2021 and compared them with the prices as of the last day of February (28th February 2021).
READ: Pension Fund Administrators in Nigeria and their scorecard
Below is a list of the best-performing funds in February 2021;
RSA Fund I
This fund has the highest allocation of risky or variable income instruments and participation is strictly upon a formal request from a contributor. The RSA Fund I is suitable for persons who want to invest in high-risk instruments with higher rewards. Hence, contributors who are 50 years and above cannot apply to be moved into this fund.
According to available data, only Stanbic IBTC Pension Manager Limited recorded positive growth in the month of February 2021, growing by 0.5% to close at N1.7223.
Name of PFA: Stanbic IBTC Pension Managers
- February return: 0.5%
It is worth noting that, the information of Investment one Pension Managers was not available on their website, while that of NLPC Pension Fund Administrators and Pensions Alliance Limited could not be computed. Other administrators in this category recorded a decline in the review month.
READ: PenCom discontinues Employee Death Benefit Account
RSA Fund II
This fund is balanced and suitable for middle-aged contributors as well as those with a medium risk appetite. It is designed to be less risky with reduced allocation to variable income instruments compared to Fund I. The age requirement for participation is 49 years and below.
First Position: Nigerian University Pension Management
- February return: 0.4%
Second Position: Fidelity Pension Managers Limited
- February return: 0.2%
Third Position: Radix Pension Fund Managers Limited
- February return: 0.03%
As was the case with the RSA Fund I, Information on Investment One Pension Managers could not be obtained from the website, while NLPC and Pensions Alliance Limited could not be computed. Others on the list recorded a decline in February 2021.
READ: Pension asset increases to N9.33 trillion – PenCom
RSA Fund III
This is a conservative fund that is designed for contributors close to retirement and contributors with a low-risk appetite. It is suited for contributors between the ages of 50 and 60 years. However, younger contributors may opt to participate in this fund category.
First Position: Leadway Pensure PFA Limited
- February return: 1.3%
Second Position: First Guarantee Pension Limited
- February return: 0.4%
Third Position: Nigerian University Pension Management Company
- February return: 0.3%
READ: PenCom moves to deepen pension fund investment participation
RSA Fund IV
The RSA Fund IV is exclusively for retirees. In the month of February, of all 22 Pension Fund Administrators, 10 of them recorded positive growth. However, they were all marginal growth of less than 1%.
First Position: Leadway Pensure PFA Limited
- February return: 0.8%
Second Position: Veritas Glanvills Pensions Limited
- February return: 0.5%
Third Position: AXA Mansard Pension Limited
- February return: 0.5%
A cursory look at the Q4 2020 Pension industry report shows that the total value of Pension Fund assets was N12.31 trillion as of 31st December 2020, comprising of N8.51 trillion for the RSA active funds, N962.66 billion for the RSA Retiree fund, N1.56 trillion for the CPFAs, and N1.27 trillion for the approved existing schemes.
