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Vantage, IBTC, PACAM, Legacy, 5 others join mutual funds league in 2019

SEC has been doing its best to publish, as often as it can, a compilation of the Net Asset Values of Nigerian mutual funds.

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The State of the Nigerian Mutual Funds Industry

One of the problems that are prevalent in Nigeria is that of paucity of data. Though that problem still bedevils the Nigerian mutual fund industry, the Security and Exchange Commission (SEC) has been doing its best to publish, as often as it can, a compilation of the Net Asset Values of Nigerian mutual funds.

One way to judge the health of an industry like the mutual fund industry is to look at the trends of fund flows into and out of the industry. In one of my recent pieces, I pointed out that the state of the industry seemed to be strong, and judging by how much investors poured into the industry in 2019, the state of the industry seems to be even stronger.

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Nine funds that joined the league of mutual funds in 2019

Another way to judge the health of the industry is to look at its growth in terms of the number of funds, especially number of new funds, launched within a review period or year.  Due to lack of alternative facts, our analysis is based solely on the publications by the Security and Exchange Commission.  Based on the SEC NAV Summary reports, we can comfortably say that Nine new funds were added to the list of active mutual funds in Nigeria in 2019.

That is a slight improvement over the 8 new funds that were added in 2018, but nothing compared with the 16 new funds added in 2017. Be that as it may, the fact that the industry added more funds, with none going into extinction, is quite commendable and a mark of growth. Here are the newcomers in 2019.

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Vantage Dollar Fund and Vantage Equity Income Fund

Vantage Dollar fund is a Eurobond fund, being denominated in US Dollar. It is a product of InvestmentOne Fund management. Though the fund opened for issue on April 23 2018, closing on June 1, 2018, it did not get listed in the SEC report until sometime in 2019, making it a newcomer in 2019. Its current asset value is N1.8 billion and the fund generated about N78 million in gains in 2019. InvestmentOne also launched the Vantage Equity Income Fund.

[READ MORE: Nigeria’s mutual funds generate over N529billion in new investments in 2019)

That brings to 6, the number of funds being managed by InvestmentOne Asset Management, giving it a total asset under management of N21.6 billion.

  • Another newcomer in 2019 is the IBTC Shariah Fixed Income Fund. The Fund is an “open-ended unit trust scheme that invests in Shariah-Compliant fixed income securities and investment products that are permissible under Shariah principles.” A product of Stanbic IBTC Asset Management, the fund was valued at N1.5 billion by the end of 2019 and generated an estimated N54.6 million in gains also in 2019. With that, the number of funds under the management of Stanbic IBTC Asset Management company now comes to 14, with total asset undermanagement of N478.2 billion as at the end of 2019.
  • PACAM Eurobond fund and PACAM Equity Fund also made it to the list of newcomers in 2019. Though PACAM Eurobond fund is said to be Eurobond fund, at least by nomenclature, the fund manager’s website says that the fund invests in “Fixed Income instruments such as FGN Bonds, Sub National Bonds, Corporate Bonds and other investment-grade Fixed income instruments giving investor’s opportunity to invest in secure and high yielding Bonds offered by Federal and State Governments of Nigeria and large Corporates.” The launch of the two funds brings to 5, the number of funds being managed by PACAM Asset Management company, bringing its asset under management, AUM, to N1.56 billion.
  • Lead Balanced fund also got enlisted in the SEC NAV Summary Report for the first time in 2019. A product of Lead Asset Management, the fund is an Open-Ended Fund authorized and registered in Nigeria as a Unit Trust Scheme. Aimed at achieving capital appreciation by holding long-term positions in different asset classes and provide regular income streams for unit holders, Lead Balanced fund was valued at N475 million at the end of 2019, after making about N10.57 million in gains. Lead Asset management now manages 2 funds with combined AUM of N566 million.
  • Legacy Money Market: Not wanting to be undone by other asset managers, First City Asset Management launched its Legacy Money Market fund, to bring the funds under its management to 4, and total asset under its management to N20.5 billion.
  • Growth & Development Asset Management Limited also debuted in the Nigerian mutual fund industry with its GDL Money market fund, an open-ended mutual fund that invests in a broadly diversified portfolio of short-term, high-quality money market securities such as Treasury Bills, Commercial Papers, Bankers Acceptances and Certificate of Deposits issued by rated banks in Nigeria. With that, Growth & Development Asset Management Limited, GDL, gets set to make its mark in the industry with its current AUM of N896 million.
  • FSDH Treasury Bill Fund: 2019 saw what could be known as Nigeria’s first and only Treasury Bill fund, with the launch of FSDH Treasury Bill Fund by FSDH Asset Management.  Though a money market fund by its characteristics, the FSDH Treasury Bill Fund “provides investors with the opportunity to invest in a range of Treasury Bills across different tenors” in Nigeria. That brings the number of funds being managed by FSDH Asset Management to 4 and its total asset under management stood at N44 billion as at the end of 2019.

[READ ALSO: How to build a profitable Mutual Fund Portfolio)

Conclusion

There is no doubt that the Nigerian mutual fund environment is still evolving and a fertile ground for innovation and product development. A lot of progress has been made, and a lot more needs to be made. One area that is yearning for attention is the area of fund of funds. We are watching to see who launches the first fund of funds in Nigeria.

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Patricia

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.

4 Comments

4 Comments

  1. Anonymous

    January 30, 2020 at 7:25 am

    Anytime I read any captivating article on this platform, I assume that it will definitely be Uche Ndimele and whenever I check you don’t dissappoint. Keep up the good work

  2. Uchey Ndimele

    January 30, 2020 at 2:13 pm

    This is flattering, Thank you so much for your kind comments, they are the energy that I need to do more. Enjoy your day

  3. Eziaku

    April 4, 2020 at 5:27 am

    I need to invest in mutual fund, which one is good for me as a starter

  4. Abu

    May 17, 2020 at 4:01 pm

    Great piece. What’s fund for fund?

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Business News

Why households that engage in subsistence agriculture are poor – Yemi Kale

“We established the poverty line at N137,430 and any individual or family that spends below this on food in a year will be classified below the poverty line.”

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Rauf Aregbesola annual colloquium

Subsistence agriculture alone may never be able to sustain any household in Nigeria. This is according to Nigeria’s Statistician-General and CEO of the National Bureau of Statistics (NBS), Dr Yemi Kale, who spoke during the Rauf Aregbesola annual colloquium earlier today. The event had the theme Government Unusual: Innovative Economic Solutions to Unlock Mass Prosperity.

Using insights from the 2019 National Living Standards Survey, Dr Kale explained that households that are solely engaged in subsistence agriculture appear to have the highest levels of poverty. This set of families are followed by households with more than twenty members.

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“This doesn’t mean agriculture is a bad thing. It simply means the way we do agriculture in Nigeria has to be improved so that it does not become synonymous with poverty or we have to find other sources of income for farmers to supplement their standard of living,” he said.

Speaking further, Dr Kale explained that the living standards survey, which was conducted in collaboration with the World Bank, started in late 2018 and ended in 2019. The survey utilized data from all states in Nigeria except Borno whose data was not considered credible enough given the security situation in the state. Kale said:

“We established the poverty line at N137,430 and any individual or family that spends below this on food in a year will be classified below the poverty line.”

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Given this yardstick, the survey established that at least 22.9 million Nigerians are living in poverty, with the bulk of this number coming from the rural areas and states with low indices on education, social welfare initiatives, employment, and income equality.

Formalising the informal sector

The informal sector comprises people who earn enough to keep above the poverty line on a daily basis, but not enough to sustain them in the event of a lockdown, as was seen recently in some states during the April COVID-19 lockdown. This is a problem that can only be solved if the informal sector becomes formalised, Kale said. In other words, formalizing this sector will help more daily wage earners stay above the poverty line. He made reference to the recent lockdown which incapacitated lots of daily wage earners in states such as Lagos.

Nigeria’s poor versus other African countries

Making a comparison, Yale also noted that Nigeria’s poor are poorer than their counterparts in South Africa despite the fact that the nominal size of Nigeria’s economy is much larger.

He attributed this to findings which showed that Nigerians spend three times more on foods and consumables than all other items put together, as against countries like South Africa and Egypt where less is spent on food items.

“Nigerian remains Africa’s largest economy, but per capita income is rather low for a country of this size, and the level of poverty presents a major development challenge” he noted.

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Reducing unemployment – the fastest way out

According to Kale, the fastest way out of poverty is to reduce unemployment, as people will naturally have more to spend on their needs when they are employed. To support his point, Kalu cited five Nigerian states with the least poor people in comparison to the other states Lagos, Delta, Ogun, Osun, and Oyo. Each of these states has fewer unemployment levels compared to the states with higher poverty rates such as Sokoto, Taraba, Jigawa, Ebonyi, and Adamawa states.

Patricia

Other indicators which show similar trends across the states are education, and ease of doing business. The poverty rates are almost always higher where education is poor.

Increasing local production

Also making a presentation during the colloquium, Dr Joe Abah called for a review of the 1978 land use act which he said is limiting in its provisions. He also stressed that Nigeria needs to improve access to capital, raw materials, lands, and technological innovations so that production capacity can increase significantly.

“All of the richer countries simply produce more, and they produce more things that people want to buy and want to consume. It could be products or services. the higher your production capacity, the richer you are. if you cannot produce, you cannot develop your education or your health sector.”

According to Abah, the cost of governance cannot be reduced without adopting some of the suggestions of the Oronsaye report, and restructuring the system for productivity. He said that “there is also a need to link budget and funding to productivity so that public sectors begin to understand that the more funding they require, the more they are expected to produce as well.”

He also suggested that states should start focusing on their competitive advantage and use same to improve general productivity in their state.

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Other panelists at the colloquium include Mallam Nasir El-Rufai, Governor, Kaduna State, Sen. Abubakar Bagudu, Governor, Kebbi State, Mrs. Hajara Adeola, CEO, Lotus Capital Limited, Mr. Bismarck Rewane, CEO, Financial Derivatives Limited, Dr. Joe Abah, Country Director, DAI, Dr. Yemi Cardoso, Chairman, Citibank Nigeria, with Boason Omofaye as the moderator.

You may watch the colloquium by clicking here.

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Economy & Politics

Output cut: Nigeria leads in OPEC non-compliance with 50 unsold cargoes of crude

Nigeria and Iraq were reported not to have kept to their commitment to the huge production cut deal that had promised to reduce output by 9.7 million barrels of crude oil per day.

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Petroleum Industry Bill to be passed by mid-2020, says Sylva, FG discovers crude oil in north, says there’s more , OPEC, non-OPEC countries to meet as Saudi, Russia price war affects Nigeria’s budget, FG considers fuel price reduction, OPEC deal: Nigeria to generate additional $2.8 billion revenue as FG reacts

As opinions continue to differ on whether OPEC will extend its current oil output cut beyond June, available information has shown that not all members of the oil cartel complied fully with their agreed quotas for the month of May. This is despite the fact that the oil output by OPEC member countries reached its lowest in almost 20 years.

Available data from oilprice.com showed that OPEC members cut their output by 5.91 million barrels per day from the April level, producing 24.77 million barrels per day. This figure also showed a 4.48 million barrel per day of the agreed output cut, thereby representing a 74% compliance level.

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Nigeria and Iraq were reported not to have kept to their commitment to the huge production cut deal that had promised to reduce output by 9.7 million barrels of crude oil per day.

Iraq was able to achieve just 38% compliance of its agreed output cut for the month of May, while Nigeria, which achieved a much lower compliance of the agreed output cut, recorded 19% compliance of what was agreed. Saudi Arabia showed the highest compliance, recording 96% of the agreed output cut.

Some have attributed the noncompliance of some members of OPEC to the agreed output cut, to the contractual obligations and commitment to buyers, given the short timeframe between when the agreement for the output cut was made and its implementation.

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Meanwhile oil exports from Angola and Congo remained steady at high prices on Friday, while Nigerian oil fared lower amid huge inventory of unsold cargoes.

Nigeria continues to face some difficulty in the oil market, primarily due to sluggish demand from Europe; it has around 50 unsold cargoes of crude oil yet to be sold for the months of June and July.

Meanwhile, India has become one of the few buyers for the Nigerian oil. Indian oil firms bought about 5-6 million barrels of Nigerian crude oil last week and has bought about 2 million barrels as at Thursday this week.

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Business News

President Muhammadu Buhari reshuffles NNPC’s board of directors

Note that the former board included the late Chief of Staff to the President, Abba Kyari as a member. Stakeholders have since expected the President to reconstitute a new board to take over.

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President Muhammadu Buhari to address Nigerians on Monday, receives update and recommendations from PTF

President Muhammadu Buhari has approved the reconstitution of the board of the Nigerian National Petroleum Corporation (NNPC) after the expiration of the tenure of the current board.

The newly constituted board members are expected to serve for a tenure of three years, effective immediately. They will take over from the last board, whose 3-year tenure officially ended in 2019. Information about this development is contained in a State House press release that was published on the official twitter handle of the Nigerian Presidency on Saturday morning.

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READ MORE: Construction of ICT Parks nudges Nigeria into digital transformation

READ ALSO: CBN and NIPOST open pilot microfinance branches

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The newly constituted NNPC board is made up of six members from each of the geo-political zones in the country. The members include the following individuals:

  • Mallam Mohammed Lawal, representing the North West
  • Dr Tajudeen Umar from North East
  • Adamu Mahmood  Attah from North Central
  • Senator Magnus Abe from the South-South
  • Dr Stephen Dike from the South East, and
  • Chief Pius Akinyelure from the South West geo-political

READ MORE: Boko Haram: A protracted battle yet to be won?  

Of the six members, three are returning members on the board – Chief Pius Akinyelure, Mallam Mohammed Lawal, and Dr Tajudeen Umar from North East.

Note that the constitution of the new board is considered a welcome development, as it balances the representation of the six geo-political zones on the board. The previous constitution of the board was faulted for not being “balanced”.

READ ALSO: Full text of President Muhammadu Buhari’s 58th Independence day broadcast

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Note that the former board included the late Chief of Staff to the President, Abba Kyari as a member. Stakeholders have since expected the President to reconstitute a new board to take over.

Patricia

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