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Funds Management

Mutual Funds in Nigeria and how they rank in reporting and transparency

Even the fund manager stands to gain from transparency in reporting mutual fund activities.

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mutual funds

Mutual funds in Nigeria are growing both in number and asset value. Going by the latest NAV Summary Report from the Security and Exchange Commission, (SEC) for the week ending June 19th, 2020, there are 106 mutual funds in Nigeria with a total asset value of N1,337,044,839,679 the equivalent of $3,714,013,444. That is about the most that one can confidently and unequivocally say about Nigerian mutual funds. That underscores the extent of transparency, or lack thereof, in mutual fund reporting in Nigeria. One would expect that an industry that large, one whose net asset value represents 10% of Nigeria’s stock market capitalization, would not be shrouded in any form of opacity.

What is Transparency: The dictionary meaning of transparency is “the state of being easily detected or seen through, easily and readily understood”. When that definition is applied to mutual funds, transparency translates into the ability of the investor to look through his investment portfolio report or fact sheet and be able to see what the investment manager is doing with his money.

Why Transparency in Reporting Matters to the investor: Though mutual fund investors may largely be retail investors with not so much investment knowledge, they would like to monitor their investment performance, the risks involved as well as what their money is being invested in. In addition, investors would like to know how much they pay by way of fees. Transparency makes that information known. To the investor, more transparency translates to more information upon which investment decisions can be made. It also increases the level of comfort that investors have about the fund manager to whom they have given their money to manage.

READ ALSO: Top 10 high-yield money market funds that beat inflation in Nigeria

Why Transparency Matters to the Fund Manager: Even the fund manager stands to gain from transparency in reporting mutual fund activities.  Fund managers operate in a competitive market environment and transparency gives them a competitive advantage. A fund manager that discloses information readily, timely, and voluntarily stands to attract investment contributions from investors. It helps to make communication with investors clearer and timely.

Fund Managers Transparency Ranking: Having made known what and why transparency in mutual fund reporting is and should be the norm, I present below a transparency ranking of fund managers based on the availability of requisite information on their website or elsewhere, the frequency and availability of fact sheets as well as the content of such factsheets.


Stanbic IBTC Asset Management Company:

Daily Prices: Stanbic IBTC Asset Management Company has been at the forefront of mutual fund reporting transparency in Nigeria. It has daily fund prices for the 14 funds it manages updated daily on its website and sent to you upon request. Not only are the prices readily available daily, but they are also available on a historical (inception to date) basis.

Factsheets: Prior to 2019, Stanbic IBTC Asset Management Company used to have a monthly fact sheet for each of their funds, but that got changed to a consolidated quarterly report. The quarterly report is released on a timely basis. The beauty of that report is that it tells the investor the risk profile of each fund, the expense ratio, asset allocation by sector, top 3 stock holdings (which is grossly inadequate disclosure) as well as current fund performance juxtaposed with 3- and 5-year performance data. The fact sheet also shows the investor the performance of the benchmark index for each fund.  Other information contained in the fact sheet includes fund size, NAV, initial and subsequent investments as well as fund objectives. The Q1 2020 factsheets are currently on the website.

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Sigma Pensions

Annual Financial Reports: In addition to the rendition of the fact sheets as noted above, Stanbic IBTC Asset Management publishes the audited financial statements of all the funds under its management. Although that of 2019 has not been published, that of 2018 has been published.

READ ALSO: SEC DG, Mary Uduk, addresses impact of CBN’s policy on equities market


Vetiva Asset Management Company:

Daily Prices: Vetiva Asset Management Company is the second most transparent fund manager in Nigeria. The daily fund prices are readily available although some times it looks like only the dates change without the actual prices changing. This may have to do with the valuation frequency of the funds.

Factsheets: Vetiva Asset Management Company has a monthly factsheet for its funds. The fact sheet contains most of the information that investors require. It beats Stanbic IBTC as it reports the top 10 holdings, which is better than Stanbic’s 3 top holdings. Like Stanbic, Vetiva Asset Management Company reports the risk profile of its funds but not all, and also reports the gross expense ratio. In addition, it lets investors see the funds’ MTD, QTD, YTD, ITD performance in juxtaposition with the relevant benchmarks. The factsheets used to be timely but as at the time of writing, the latest available is for the end of March 2020, it is likely they fund manager may be changing to quarterly reporting like Stanbic IBTC. Other pertinent information on the fact sheet includes dividend history, NAV, Bloomberg identifier, and lots more.

READ ALSO: What You need to know about Stanbic IBTC’s Shari’ah Fixed Income Fund (“SFIF”)

Stanbic 728 x 90

Lotus Capital Asset Management Company:

Daily Prices: Lotus Capital Asset Management comes next in line on transparency in mutual fund reporting. The fund manager publishes daily mutual fund prices but unlike Stanbic and like Vetiva, historical prices are not readily available. In that case, the prices are available on a get it or lose it basis.

Fact Sheets: Lotus Capital Asset Management publishes its factsheets on a quarterly basis and has published Q1 2020 edition for each of its funds. Though it does not show expense ratio, it shows the management and incentive fee percentages as well as a description of the risk profile of the fund. In terms of returns, the factsheet shows the QTD, YTD and ITD returns. It does show 5 top stock holdings as well as asset allocation by sector.

Annual Financial Reports: In addition to the fact sheets being available quarterly, Lotus Capital Asset Management publishes the audited financial statements of all the funds under its management. And the 2019 audited financial statement has been put on the platform.


Quantum Zenith Asset Management Company:

Daily Prices: Quantum Zenith Asset management Company has made a lot of changes to its reporting and by so doing has become one of the most transparent in mutual fund reporting. Daily prices are readily available as well as historical prices in downloadable form.

Factsheets: Quantum Zenith Asset management Company has the funds’ factsheets tucked away on the website The fund manager will be better off making it easier for investors to find the factsheets as its presence is not very evident from the home page.  The fact sheet has most of the required information including top 5 holdings. The beauty of the performance presentation is that it shows whether the fund is out or under perfuming the relevant index and by how much. Information on expense ratio is not provided except the management fee rate.


United Capital Asset Management Company:

Daily Prices: United Capital Asset Management Company would probably have ranked the first or second fund manager if not for the lack of daily prices. On its web site, the last daily price is dated June 14th, 2019. However, I have been receiving the weekly prices upon request and investors can too.

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Factsheets: United Capital Asset Mgt. Ltd publishes a monthly fact sheet, the latest being for the month of May 2020. The factsheet shows the risk profile of the fund, the total expense ratio, as well as MTD and YTD return numbers put side by side with that of the benchmark in addition to a 5-year performance summary.  Unfortunately, it does not contain information on what the funds are invested in but it shows the allocation by asset type.

READ MORE: Nigeria’s mutual fund asset value hits N1 Trillion


Others

FSDH is another fund manager that practices or is cognizant of the importance of transparency in fund reporting. The fund manager reports daily prices which can also be downloaded on a historical basis. It also publishes fact sheets. Regrettably, FSDH has been slacking on the timeliness of the fact sheets as the last published ones are for Q4 2019 

FCMB Asset Management is yet another reporting transparency conscious fund. The fund manager ensures that the fund prices are on their website daily. They used to let investors have the funds’ fact sheets but that has stopped as the last one posted was for December 2018

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Other Fund Managers:  There are other fund managers that are transparent with regard to daily fund prices like ARM Asset Management, Afrinvest, Chapelhill, FBN, FCMB, and Meristem but the lack of factsheets pushed them out of contention.

Conclusion: The fund industry has come a long way in Nigeria and it continues to evolve, as the regulators tie all the loose ends and fund managers begin to leverage off of the advantages from transparency, my hope is that mutual fund reporting will improve and the investors will be the happier for it.

 

 

 

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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    Exclusives

    Best performing Mutual Funds in February 2021

    Nairametrics reviews the best Mutual Funds in the month of February 2021, judging by their performance.

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    Best Mutual Funds in Nigeria

    Data obtained from the Security and Exchange Commission (SEC), showed that only 25 mutual funds out of the 118 registered funds in the month of February recorded price gains in the period.

    Mutual funds have always been considered as a good alternative investment opportunity, particularly for retail investors because it gives them access to diversified and professionally managed portfolios at a low price.

    After delivering an impressive growth of 51.6% in 2020 and kicking off 2021 with a marginal decline of 0.13% in January, the total net asset value of the registered mutual funds also declined further by 0.94% between January and February 2021.

    According to SEC, the total net asset value of the 118 registered mutual funds in Nigeria was N1.56 trillion across the 9 mutual fund types offered as of February 26, 2021.

    READ: Top 5 Fund Managers in Nigeria by asset value

    A comparison of the performance of the fund types month-on-month indicated that despite the fall in total net asset value at the end of February, real estate bonds’ net asset value grew by 17.48%, exchange traded bonds by +11.72%, fixed income funds by +5.27% while the bond funds grew by +1.26%. The infrastructure bonds sustained their value in January, recording no change in the month. Other funds recorded losses with the money market fund recording the highest loss of 7.09% in net asset value during the month.

    It is also worthy of note that out of the 118 registered mutual funds, only 32 mutual funds had increased in net asset value between January and February 2021 while only 25 mutual funds had increased in unit price.

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    Sigma Pensions

    Below are the top-performing mutual funds in the month of February 2021. We also highlighted their performance in terms of returns and changes in net asset value and included profiles of the funds as described on their websites.

    READ: Nigeria’s mutual fund asset value hits N1 Trillion


    FBNQuest Asset Management Limited – Retail (Bond Funds)


    The FBN Nigeria Eurobond is a fixed income mutual fund that invests in the US Dollar-denominated debt instruments issued by the Nigerian government and reputable corporate institutions. Investments can be made into this fund by both retail and institutional investors.

    To get started as a retail investor, a minimum investment of $2,500 is required and the minimum holding period is 180 days.

    January 29, 2021

    Stanbic 728 x 90

    Fund Price – N49,736.31

    February 26, 2021

    Fund Price – N51,765.35

    Return – 4.08%

    Ranking – Fifth

    Commentary: The retail bond fund package of FBNQuest Asset Management Limited performed as the fifth-best fund in February 2021. The unit price appreciated by 4.08%, closely behind the growth of the institutional bond fund managed by the same asset manager.

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    The net asset value of the fund increased by 7.81% from N4.62 billion as of 29th January 2020, to N4.98 billion as at end of February 2021.

    READ: Naira falls across forex markets as CBN suggests official rate has been adjusted


    FBNQuest Asset Management Limited – Institutional (Bond Funds)

    The FBN Nigeria Eurobond (USD) designed for institutional investors is also invested in US Dollar-denominated debt instruments issued by the Nigerian government and reputable corporate institutions and managed by FBNQuest Asset Management Limited.

    To begin investment as an institutional investor, a minimum of $100,000 is required for a minimum tenor of 180 days.

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    January 29, 2021

    Fund Price – N49,681.06

    February 26, 2021

    Fund Price – N51,712.01

    Return – 4.09%

    Ranking – Fourth

    Commentary: The FBNQuest Asset Management Limited bond funds created for institutional investors is the fourth in the list best performing fund in the month of February, growing its unit price by 4.09% and net asset value by 4.41% from N578.37 million in January 2021 to N603.85 million in February 2021.

    READ: Investors pump N7 billions into New Gold ETF


    Nova Dollar Fixed Income Fund (Fixed Income Fund) – Novambl Asset Management

    Nova USD Fixed income fund is an actively managed open-ended unit trust scheme managed by Novambl Asset Management. The fund has an asset allocation range target of 0% – 80% on sovereign Eurobonds, 0% – 80% on corporate Eurobonds, 0% – 50% on money market instruments and finally 0% – 5% on Cash.

    The issue price is $100 per unit and the minimum initial investment for the offer is 5 units of the funds, while additional/subsequent investments will be issued in multiples of 5 units and payable in full, upon subscription.

    January 29, 2021

    Fund Price – N393.57

    February 26, 2021

    Fund Price – N410.23

    Return – 4.23%

    Ranking – Third

    Commentary: Nova dollar fixed-income fund, managed by Novambl Asset Management Ltd, recorded unit price appreciation of 4.23% from N393.57 in January 2021 to N410.23 in February 2021. The fund’s net asset value also increased by 4.17% from N122.95 million as of 29th January 2021 to N128.08 million at end of February 2021.


    United Capital Euro Bond Fund – United Capital Asset Management Limited (Bond Funds)

    The United Capital Nigerian Eurobond Fund is an open-ended mutual fund that invests in dollar-denominated euro bonds, floated by the Federal Government of Nigeria, Nigerian top-tier banks, and corporates.

    Investors can start with a minimum of 10 units, with each unit costing $100 and multiples of 5 units can be purchased thereafter.

    January 29, 2021

    Fund Price – N46,347.64

    February 26, 2021

    Fund Price – N48,466.73

    Return – 4.57%

    Ranking – Second

    Commentary: The euro bond fund owned by United Capital Asset Management Ltd recorded a unit price growth of 4.57% in February 2021. The net asset value however declined by 3.61% from N29.74 billion as of 29th January 2021, to N28.67 billion at the end of February 2021.


    Stanbic IBTC Dollar Fund – Stanbic IBTC Asset Management Limited (Fixed Income Funds)

    Stanbic IBTC Dollar Fund (SIDF) is an open-ended fund launched in January 2017. The fund invests a minimum of 70% of its portfolio in high-quality Eurobonds, a maximum of 25% in short-term USD deposits, and a maximum of 10% in USD equities.

    The expense ratio of the fund is 1.5%. The minimum investment amount is $1,000 while additional investments is $500. All investments must be held for a minimum period of 180 days.

    January 29, 2021

    Fund Price – N485.29

    February 26, 2021

    Fund Price – N507.73

    Return – 4.62%

    Ranking – First

    Commentary: This is a dollar fund by Stanbic IBTC Asset Management Limited, which led the list of best-performing mutual funds in the month, appreciating by 4.62% in February.

    Also, the net asset value as of 26th February 2021, was N119.23 billion indicating a growth of 3.50% when compared to N115.20 billion recorded as of January 29 2021.


    Bubbling under…..

    The following are the other top 10 performing funds on our lists in ascending order:

    Lotus Capital Fixed Income Fund – Lotus Capital Limited (Fixed Income Fund)

    Return – 0.68%

    Anchoria Equity Fund – Anchoria Asset Management Limited (Equity-Based Funds)

    Return – 0.77%

    SFS Fixed Income Fund – SFS Capital Nigeria Limited (Fixed Income Funds)

    Return – 1.00%

    Cordros Dollar Fund – Cordros Asset Management Limited (Fixed Income Funds)

    Return – 1.51%

    ARM Discovery Balanced Fund – Asset & Resources Management Company Limited (Mixed Funds)

    Return – 1.58%

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    Funds Management

    Best Pension Funds in Nigeria for the month of February 2021

    Nigerian Pension Fund administrators in the month of February across the different funds dipped significantly in February 2021

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    This is why you should make voluntary contributions to your pension fund, The Pension Transfer Window – Who holds the Joker?

    The performance of most Nigerian Pension Fund administrators in the month of February across the different funds dipped significantly as only 22% of the funds recorded positive growth in the month.

    • This is according to data tracked by Nairalytics Research on the fund performance released on the websites of the PFAs.
    • The overall downturn in the review month came on the back of the significant positive performances churned out in the previous year, despite the effects of the pandemic on the global economy.

    Nairametrics considered the prices of the different RSA funds as of 31st January 2021 and compared them with the prices as of the last day of February (28th February 2021).

    READ: Pension Fund Administrators in Nigeria and their scorecard


    Below is a list of the best-performing funds in February 2021;

    RSA Fund I

    This fund has the highest allocation of risky or variable income instruments and participation is strictly upon a formal request from a contributor. The RSA Fund I is suitable for persons who want to invest in high-risk instruments with higher rewards.  Hence, contributors who are 50 years and above cannot apply to be moved into this fund.

    According to available data, only Stanbic IBTC Pension Manager Limited recorded positive growth in the month of February 2021, growing by 0.5% to close at N1.7223.

    Name of PFA: Stanbic IBTC Pension Managers

    • February return: 0.5%

    It is worth noting that, the information of Investment one Pension Managers was not available on their website, while that of NLPC Pension Fund Administrators and Pensions Alliance Limited could not be computed. Other administrators in this category recorded a decline in the review month.

    READ: PenCom discontinues Employee Death Benefit Account  

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    Sigma Pensions

    RSA Fund II

    This fund is balanced and suitable for middle-aged contributors as well as those with a medium risk appetite. It is designed to be less risky with reduced allocation to variable income instruments compared to Fund I. The age requirement for participation is 49 years and below.

    First Position: Nigerian University Pension Management

    • February return: 0.4%

    Second Position:  Fidelity Pension Managers Limited

    • February return: 0.2%

    Third Position: Radix Pension Fund Managers Limited

    • February return: 0.03%

    As was the case with the RSA Fund I, Information on Investment One Pension Managers could not be obtained from the website, while NLPC and Pensions Alliance Limited could not be computed. Others on the list recorded a decline in February 2021.

    Stanbic 728 x 90

    READ: Pension asset increases to N9.33 trillion – PenCom


    RSA Fund III

    This is a conservative fund that is designed for contributors close to retirement and contributors with a low-risk appetite. It is suited for contributors between the ages of 50 and 60 years. However, younger contributors may opt to participate in this fund category.

    First Position: Leadway Pensure PFA Limited

    • February return: 1.3%

    Second Position: First Guarantee Pension Limited

    • February return: 0.4%

    Third Position: Nigerian University Pension Management Company

    • February return: 0.3%

    READ: PenCom moves to deepen pension fund investment participation

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    RSA Fund IV

    The RSA Fund IV is exclusively for retirees. In the month of February, of all 22 Pension Fund Administrators, 10 of them recorded positive growth. However, they were all marginal growth of less than 1%.

    First Position: Leadway Pensure PFA Limited

    • February return: 0.8%

    Second Position: Veritas Glanvills Pensions Limited

    • February return: 0.5%

    Third Position: AXA Mansard Pension Limited

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    • February return: 0.5%

    A cursory look at the Q4 2020 Pension industry report shows that the total value of Pension Fund assets was N12.31 trillion as of 31st December 2020, comprising of N8.51 trillion for the RSA active funds, N962.66 billion for the RSA Retiree fund, N1.56 trillion for the CPFAs, and N1.27 trillion for the approved existing schemes.

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