EXCLUSIVE: Mutual Funds’ Asset Value Plunges

The Net Asset Value of Nigeria’s mutual funds plunged to N660 billion in November last year, contrasting with October’s value of N683 billion. This is as investors pulled out an estimated N29 billion of their funds.

Fund investors are left with N660.12 billion – New money into mutual funds is estimated to be around N9 billion. When the opening net asset value is combined with the withdrawals and subscriptions, as well as the gain for the month, which is estimated to be minus N2.4 billion, fund investors are left with a total net asset value of N660.12 billion.

This is according to analysis of latest available information on mutual funds’ assets, as provided by the securities and Exchange Commission for the month of November, 2018.

Why the huge redemptions?

Many probabilities as to why – The huge redemptions may be due to asset re-allocations by investors from money market mutual funds to treasury bills and bonds, even as yield inched further up in the month of November. It may also be as a result of political candidates pulling out funds to fund their campaigns and other political activities.

These are the funds most affected– Stanbic IBTC Money Market fund suffered the highest redemption in money term. But it is not the highest on percentage basis. The money market fund category of mutual funds took in N23 billion worth of redemptions, with approximately N10 billion flowing out of Stanbic IBTC Money Market fund while FBN Money Market fund also suffered an estimated N9 billion redemption.

Other funds that suffered seemingly large redemptions include Union Homes Real Estate Investment Trust which saw N3 billion of outflow. ARM Money Market fund and AXA Money Market funds suffered redemptions in the N1 billion range.

On the other hand, Stanbic IBTC Dollar Fund received the highest new money in the amount of about N2.5 billion flowed by FBN Money market’s N1.4 billion.

Fund Manager Asset Ranking

Stanbic IBTC Asset Managers is still largest fund manager – Inspite of the capital activities that took place within the month under review, Stanbic IBTC Asset Management Limited still retains its position as the largest fund manager by asset having 42.76% of the total mutual funds under its management.

FBN Capital Asset Management Limited is the second largest fund manager by asset with 21.5% under its management. Those two largest fund managers have 64.26% of mutual fund assets under their management. The third largest fund manager is Asset and Resourced Management Company (ARM) Limited whose share of mutual fund assets stands at 8.34%.

In like manner, the largest mutual fund by asset remains Stanbic IBTC Money Market Fund with 34.72% of mutual fund’s assets while FBN Money Market Fund is the second largest mutual fund in Nigeria with 19.99% of total mutual fund asset. ARM Money Market fund is the third largest with a little over 7%, 7.28%, to be exact. The smallest fund by asset, turns out to be Aiico Balanced Fund with just 0.01% of total mutual fund assets.

Unknown Asset Class

Mutual funds have remained unknown as an investible asset class in Nigeria due largely to lack of knowledge about what they are and how they work in addition to the lack of transparency that has made it difficult for investors to assess fund performance, valuation, fees, and holdings. As long as these constraining issues remain unaddressed, the growth of mutual funds in Nigeria will continue as a snail speed, if not slower.