2018 is not shaping up to be a good year for mutual fund investors, analysis from Quantitative Financial Analytics has revealed.
According to the analysis, mutual funds in Nigeria generated an estimated N4.3 billion gains in the first six months of the year. This can only be described as dismal when compared with the performance in the corresponding period of 2017 when gains of N8.9 billion was made. It even becomes abysmally clearer when viewed against the backdrop that funds gained 3% in the first six months of 2017 versus the 0.71% recorded in the corresponding period of 2018.
Only 7 funds were able to record double digit positive YTD return as at June 29th, 2018. Even at that, the double-digit performance is on the low side ranging from 16% to 10%. Comparatively speaking, by June 30th, 2017, 34 mutual funds had achieved double digit positive returns, the highest of which was 50.38% generated by New Gold ETF.
In the corresponding period in 2017, all but one fund recorded positive returns but so far in 2018, 13 funds are in the red, in terms of performance. Ironically, the fund that generated the best return (50.32%) last year, New Gold ETF, recorded the worst performance this year with a negative return of 32%. This goes to stress the point and investment caveat that past performance is not a guarantee of future performance. It will be recalled that Gold has been struggling to find its footing since the beginning of the year which has been worsened by the volatile valuation on the US Dollar.
According to research, Gold does well when the Dollar weakens but that has not been the case for most of 2018. Gold has recorded a negative return of 50.2% YTD June 30th, 2018, which underscores the performance of the New Gold ETF.
Among the big performers are Stanbic IBTC pension fund which returned 16.37% YTD followed by Vetiva Griffins 30 ETF with 12.3%, EDC Fixed Income Fund, and Coronation Balanced Fund. The funds that recorded negative performance are largely equity funds and ETFs with equity exposure. While New Gold ETF recorded -32.2%, DV Balanced Fund had -12.61% while Skye Shelter Fund recorded a negative return of 5% among others.
The broad stock market index, the NSE All share index recorded a positive gain of .09% which explains why equity-based funds brought the deck of cards down. Other indexes like the NSE Consumer index, the Stock Index 30 and Oil and Gas Index all recorded negative gains in the period under review.
So, the lackluster performance of mutual funds in the first 6 months of 2018, can be attributed to increased market volatility arising from international markets as a result of imposition of tariffs and the ups and downs in the price of oil that manifested at the later part of Q2. It is hoped that fund managers will look for other ways to improve their performance so that fund investors can smile as broadly as the did in 2017, by the end of 2018.
