Photo by rawpixel.com on Unsplash
Photo by rawpixel.com on Unsplash

2018 has so far proven that past performance does not guarantee or is not a guarantee for future performance. This has especially been so for mutual fund investors who, after the double-digit returns recorded by most of the funds in 2017, looked forward to an even better performance in 2018.

Unfortunately, 2018 seem to be comparatively disappointing as only a few funds have been able to manage low-level double-digit returns for the fiscal year ending June 30th, based on analysis of data from the Security and Exchange Commission.

Based on that analysis which covers the period from January 1st through June 30th, here are the top 7 performing mutual funds for the fiscal year ending June 30th, 2018 and they are the funds that also recorded double-digit returns.

Funds   Beginning Price  Ending Price  Yield
Stanbic IBTC Pension ETF 40 135.19            157.32         16.37
VETIVA GRIFFIN 30 ETF 17.81              20.00         12.30
EDC Fixed Income Fund 1141.49         1,281.63         12.28
Lead Fixed Income Fund 118.05            131.05         11.02
FBN Nigeria Smart Beta Equity Fund 173.31            191.24         10.35
Coronation Balanced Fund 1.07                1.18         10.05
Stanbic IBTC 30 ETF Fund 100            110.00         10.00

 

Stanbic IBTC Pension ETF 40, an ETF managed by the Stanbic IBTC Asset management came out at the top with a fiscal year return of 16.37%.

The second-best performer is Vetiva Griffin 30 ETF with a return of 12.3%. The Vetiva Griffin 30 ETF is managed by Vetiva Asset Management

The third performer is followed by EDC Fixed Income Fund’s 12.28% while the forth top performing fund is the Lead Fixed Income Fund with 11.02%.

The story is not too different from a category analysis point of view as can be seen below;


Equity-Based Fund

Though the returns were in single digit, majority of the equity funds generated positive returns with FBN Smart Equity Fund recording the only double-digit return in this category followed by Stanbic IBTC Aggressive Equity funds 7.2%. However below are the 5 top performing equity-based funds.

Coronation Research
Equity Funds   Beginning Price  Ending Price  Yield
FBN Nigeria Smart Beta Equity Fund 173.31            191.24         10.35
Stanbic IBTC Aggressive Fund 2047.48         2,194.89           7.20
Coral Growth Fund 3020.33         3,196.34           5.83
Afrinvest Equity Fund 179.62            187.83           4.57
UBA Equity Fund 0.93                0.98           4.41

Fixed Income or Bond Funds

Fixed Income or Bond Funds seem to be the panacea for downside risk as all of them came back with positive returns with two of them recording double-digit returns. Though yield decreased markedly earlier in the year, investments in money market and treasuries helped a great deal to help fixed-income funds stay afloat. And the 5 top performers are:

Bond Funds   Beginning Price  Ending Price  Yield
EDC Fixed Income Fund 1141.49         1,281.63         12.28
Lead Fixed Income Fund 118.05            131.05         11.02
Coronation Fixed Income Fund 1.06                1.16           9.21
Stanbic IBTC Guaranteed Fund 220.25            239.71           8.84
Stanbic IBTC Conservative Fund 2608.65         2,825.67           8.32

Balanced or Mixed Funds

Balanced or Mixed Funds almost followed the footsteps of Fixed income funds as all but two of them rewarded their investors with positive returns. This relatively good result may not be unconnected with their asset allocation which cuts across equities and fixed income instruments thereby giving them the upside potentials afforded by equities while being protected from the downside risk with their exposure to fixed income securities.

The highest performer in this category is Coronation Balanced Fund with 10.05%, flowed by PACAM Balanced Fund’s 7.9% while the third top performer is Stanbic IBTC Balanced Fund with 6.61%

Ethical Fund category did not perform as good as the rest. The op performer in that category is ARM Ethical Fund with 6.38% with the rest of then gaining about 3% each.

Mixed or Balance Funds   Beginning Price  Ending Price  Yield
Coronation Balanced Fund 1.07                1.18         10.05
PACAM Balanced Fund 1.27                1.37           7.90
Stanbic IBTC Balanced Fund 2266.9         2,416.70           6.61
FBN Heritage Fund 140.66            149.80           6.50
United Capital Wealth for Women Fund 1.09                1.15           5.38

 


Brace for The Worst

There is no indication that the fortunes of the market will turn for the better for the remaining part of the year. Events unfolding around the world points to even worse market performance.

The imposition of tariff by the Donald Trump-led US government and retaliations from China, Canada, Turkey and other countries is gradually unsettling the market and it does not look like Trump will sheath his sword in his selfish bid to “win the trade war”. This trade war is gradually impacting emerging markets, of which Nigeria is inclusive.

Though exchange rate has stabilized, thanks to the continuing intervention by the government, and inflation keeps moderating, but the increasing yield in the US is beginning to redirect foreign investments away from Nigeria amidst the uncertainty that the 2019 election brings. So, given the handwritings on the wall, investors should brace for the worst and may need to think of reallocating their assets in a more diversified manner that can insulate or hedge the coming market turmoil.

Uchenna Ndimele is the President of Quantitative Financial Analytics Ltd. MutualfundsAfrica.com and mutualfundsnigeria.com (both Quantitative Financial Analytics company website) is a leader in supplying mutual fund information, analysis, and commentary on African mutual funds. We provide reliable fund data; and ratings information that will add value to fund managers, the media, individual investors and investment clubs.

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