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Business News

Nigeria’s mutual fund asset value hits N1 Trillion

The total asset value of mutual funds in Nigeria has topped the trillion Naira mark, according to the December 13th 2019 report by the SEC. #MUTUAL FUND #ASSET #SEC

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Mutual Funds, Mutual Fund gone bad: Nigerian investor discloses his 10 years investment that nosedived , Nigeria’s mutual fund asset value reaches N1 Trillion

It is official. The total asset value of mutual funds in Nigeria has hit the trillion Naira mark, according to the recent report by the Securities and Exchange Commission. What a milestone!

In my April 2019 article on the state of the mutual fund industry in Nigeria, I projected that the asset value would hit the trillion Naira mark before the end of the year, going by observable trends as at that time. And here we are.

NAV summary report

The recently released NAV Summary Report by the Securities and Exchange Commission of Nigeria indicates that the total Net Asset Value of mutual funds in Nigeria is now N1,017,705,544,066. Who could have imagined that what started in 1991 with Paramount Equity fund as the only mutual fund in Nigeria, could balloon to an industry with over 100 funds and total asset value in trillions of Naira? A historical movement along memory lane shows that as at December 31, 1991, the total net asset value of mutual funds in Nigeria was N17.5 million in an industry of one mutual fund.

How did we get here?

Money market funds played an important and pivotal role in pushing the net asset value of mutual funds to the finish line towards the trillion Naira mark.  Nigerians love their yield or interest rate, no matter how small. It is that quest for yield and the flight to safety that made money market funds the darling of most mutual fund investors in Nigeria. On a year to date basis, the whole mutual funds in Nigeria attracted an estimated N481.6 billion in additional contributions, so far in 2019. Out of that sum, money market funds attracted N337 billion, according to analysis by Quantitative Financial Analytics. Within the year, three new money market funds were included in the SEC’s NAV Summary report. They are Legacy Money Market fund, FSDH Treasury Bill fund and GDL Money Market fund.

Together, those 3 added about N14 billion to the money market category’s net asset value. Though investors withdrew an estimated N125 billion from mutual funds, on a year to date basis, so far, mutual funds made an estimated gain of N9.3 billion. That analysis, therefore, boils down to the fact that money markets continue to dominate the entire mutual fund industry. 69.89% of the total assets of mutual funds are invested in money market funds, while 9.78% is in Eurobond funds (those denominated in dollar), 7.7% is in fixed income or bond funds, while 4.52% is in real estate funds. It does look like Nigerian investors are yet to either understand funds like Exchange Traded funds, Ethical and Target funds because not much investments are made in those categories. The reason can as well be due to the poor performance of those fund types.

Fund ranking by asset value

Stanbic IBTC money market fund remains the largest fund in Nigeria, with 32.29% of the total asset value of the industry. The second largest is FBN Money market fund, whose asset value makes up 17.64% of Nigeria’s mutual fund asset. Stanbic IBTC Dollar fund has taken over from ARM money market fund as the third-largest mutual fund in Nigeria.

[READ MORE: Mutual Fund: Nigerian investor discloses his 10 years investment that nosedived)

Fund manager ranking by asset value

The dynamics remain the same as Stanbic IBTC sits atop other fund managers as the fund manager with the largest asset under management, AUM. On the day that total mutual fund assets hit the trillion Naira mark, Stanbic IBTC housed 44.54% of that total. Again, FBN Capital Asset Management company retains its second position with 19.05% of Nigeria’s total mutual fund asset value. Once again, Asset and Resources Management company, ARM, is the third-largest fund manager with 8.10% of total assets of mutual funds in Nigeria, while Chapel Hill Denham Management limited took the fourth position from FSDH Asset Management company with 4.4% of mutual fund assets.

Too large to fail

If things continue the way they are, it would not be a surprise if Stanbic IBTC controlled 50% of Nigeria’s mutual fund assets. That should start to concern the regulatory authorities and they should begin to look at issues like too large to fail, in Nigeria’s mutual fund industry.

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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    Hospitality & Travel

    NGX lauds Transcorp Hotels over operational efficiency

    Transcorp Hotels Plc achieved business continuity by enhancing the organization’s operational efficiency.

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    COVID-19: Transcorp Hotel loses about N1 billion every month- CEO

    The Nigerian Exchange (NGX) Limited has lauded the efforts made by the Board and Management of Transcorp Hotels Plc towards achieving business continuity by enhancing the organization’s operational efficiency.

    NGX also congratulated the Group on the successful unveiling of new product lines and efforts towards repositioning the organization, thereby reassuring investor confidence in the company.

    This was disclosed by the Divisional Head, Listings Business, NGX, Mr Olumide Bolumole, when the management of the Hotel led by the Managing Director (MD)/Chief Executive Officer (CEO), Transcorp Hotels, Mrs Dupe Olusola, presented its Facts Behind the Figures to capital market stakeholders.

    Speaking at the event, Mr Bolumole said, “Recently, NGX hosted the CEO, Transcorp Hotels Plc, Mrs Dupe Olusola to a digital Closing Gong Ceremony to commemorate the formal listing of their ₦10Billion rights issue.

    We are pleased that Transcorp Hotels has again chosen to utilise our platform to engage the market about the financial performance as well as strategic and operational developments within the organization.

    The Exchange recognizes the efforts made by the Board and Management of Transcorp Hotels Plc towards achieving business continuity by enhancing the organization’s operational efficiency. We congratulate you on the successful unveiling of new product lines and efforts towards repositioning the organization, thereby reassuring investor confidence in the company.”

    What Transcorp is saying

    Olusola noted that “Despite the adverse effect of the COVID 19 pandemic on all our business segments, Transcorp Hotels Plc remained resilient and took a critical and fundamental decision to remain open and maintain operations at both the Transcorp Hilton Abuja and Transcorp Hotels Calabar.

    Our primary goal was to survive as individuals and as a business, to adapt and to thrive in a new, changing, and unprecedented environment. Post-COVID-19 starting from September, we recorded an improvement in all our KPIs as compared with the industry performance.

    Hotflex

    Today, leisure has become very important to us more than ever. As a hospitality business, we will constantly continue to challenge ourselves to ensure that we meet the diverse customer needs and provide excellent experience across all touchpoints.”

    What you should know

    Given that information asymmetry affects the decision-making of investors, NGX continues to encourage more issuers to take advantage of its platform to deliver timely, relevant, and accurate information to the market.

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    Business News

    Lagos State inaugurates 9-member committee to boost Entertainment & Tourism

    The Lagos State Government inaugurated a Committee Chaired by Veteran actor, Richard Mofe-Damijo, to boost tourism and entertainment in the state.

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    Lagos announces resumption time table for public and private schools, FESTAC town, Lagos cancels 2018 land use charge, LAND USE CHARGE, Lekki sealed buildings, Lagos state governor issues new guidelines for lockdown, consider full reopening of its economy,Sanwo-Olu gifts families of slain police officers N10 million naira each

    The Lagos State Government inaugurated a Committee Chaired by veteran actor, Richard Mofe-Damijo, to boost tourism and entertainment in the state.

    The Committee was inaugurated by Lagos State Governor, Babajide Sanwo-Olu on Wednesday at the Lagos House in Marina, citing that intervention and schemes by the state Committee will boost and fund the sector most affected by the pandemic.

    Veteran Nollywood actor, Richard Mofe-Damijo, is the Chairman of the nine-member committee. Other entertainment sector members of the Committee include Tunde Kelani, Mo Abudu, Kunle Afolayan, Peace Anyim-Osigwe; while government representatives in the Committee are Adebukola Agbaminoja, Ferdinand Tinubu, Taju Olajumoke and Mrs Funke Avoseh.

    What the State Government said

    “The scheme is to support creative ideas of movie and entertainment producers, who are constrained by funds to bring their concepts into reality. Applicants are to be supported with funding based on the financial plans of their projects, the grant may be as much as N40 million for each beneficiary.

    This is a signpost of all pockets of intervention we have created for the development of creativity and the tourism sector. This is with the belief that we can further raise the status of our creative output and commercialise the returns to a level where it can compete with Hollywood and Bollywood.

    We realised most of our film production experts and directors face a lot of funding impediments. We are intervening to close this gap and bring credible veterans who have the knowledge and have demonstrated capacity in the industry to drive this project,” Sanwo-Olu said.

    The Governor added that the State carefully selected five key practitioners in the industry to lead, to be supported by four government officials to limit bureaucracy for the committee to achieve its objectives.

    He said the state wants to create entertainment and tourism business leaders who will use their creativity to enhance the market share of the sector.

    “We want to support industry practitioners to raise capacity, support development of local content and discourage the action of taking proceeds from the industry out of the country, thereby denying local practitioners the benefits of their talents,” the Governor said.

    What you should know

    Recall Nairametrics reported last year that the Lagos State Governor, Babajide Sanwo-Olu, announced the approval of a N1 billion seed capital for investment in the tourism and hospitality sector in the state. The N1 billion seed capital is to help drive new growth in that sector.

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