Funds Management
Nigeria’s Micro Pension industry: A gold mine waiting to be tapped
The Nigerian government expanded the Pension Reform Act (PRA) of 2014 to include provisions for Micro pensions.
According to a report from Price Waterhouse Cooper (PWC), Nigeria has about 59.6 million workers in the informal sector. A projection from the same report says that if those 59.6 million workers set aside N100 weekly into a pension fund in 2016, by the end of 2017, Nigeria’s Micro Pension industry would be worth N61.1 billion if such contributions were invested at a real return of 4.5% per year. Extrapolate that five-year-old projection to today, and you will be amazed at the worth of Nigeria’s Micro Pension industry. In recognition of the potentials hidden within the Nigerian micro pension industry, the Nigerian government expanded the Pension Reform Act (PRA) of 2014 to include provisions for Micro pensions.
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The National Pension Commission then followed that up with the design and publication of “frequently asked questions on Micro Pension fund”, a document that seeks to answer potential questions that people may have regarding micro pension scheme. The beauty of that document is that it is in English, Igbo, Yoruba and Hausa, so that those that are not literate in English language still have the opportunity to read, understand and take advantage of the benefits of micro pension funds.
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Success Stories Elsewhere: Micro pension schemes have been known to be successful in places like India, and Kenya, but to what extent has it succeeded in Nigeria? There are indications that the scheme has not been as successful as hoped for, in Nigeria, either because of lack of interest by those for whom the scheme was created or due to lack of awareness and enlightenment campaigns.
READ: 58,800 contributors registered under micro pension plan – PENCOM Report
Nigerians have always relied on their children for their comfort at retirement but that is fast changing with so many of such children unemployed many years after leaving or graduating from schools. It is therefore imperative that parents get into plan “B”, by enlisting into micro pension plans so that if their children fail to provide for them at retirement, they have something to fall back on.
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Fund Managers Have A Role to Play: With so much potential in the micro pension industry, fund managers stand to gain by way of the fees they charge, it is therefore of importance that they get into being more active in creating awareness for this laudable scheme. A visit to the various fund managers’ websites indicates that some of them have information about micro pensions on their website. It does not appear, however, that many of them are active in the scheme as lots of them do not have the pricing information of micro pension funds as part of their daily price releases. This copious absence may be an indication of lack of activity.
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Micro Pension Fund Performance: Only a few of the pension fund managers seem to have active participants of micro pension scheme and Quantitative Financial Analytics conducted a performance analysis of those few. The few are AIICO, ARM, Premium, AXA, PAL and NLPC. It is quite pathetic that out of about 20 pension fund managers, only 5 are active with Micro pension scheme. Most of the data we collected went back to July 2019 and it is on that basis that the performance analysis was conducted. Of the few active micro pension funds, PAL micro pension fund has the highest return of 5.46%, followed by ARM Micro pension with 5.15%. AIICO micro pensions took third place with a return of 2.95%.
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Source: Quantitative Financial Analytics
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Conclusion: Though the absence of pricing information on the fund managers’ web site may not necessarily indicate inactivity, fund managers are encouraged to include that information among the information provided for the other pension funds as all investors deserve to be equally served. In addition, the presence of such information can act to increase the awareness of prospective pension fund contributors and can as well act as marketing tools for the fund managers. Micro pension scheme is still new in Nigeria and we will continue to monitor and report on progress.
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Funds Management
Nigeria’s pension asset under management hits N12.3trillion in December 2020
Nigeria’s pension asset under management hits N12.3trillion in December 2020.
Exclusives
Best performing Mutual Funds in January 2021
According to data from the SEC, 49.2% of the 118 registered funds recorded positive growth in January 2021
Mutual funds are one of the fastest-growing asset classes in Nigeria, as data from the Security and Exchange Commission (SEC), shows that 49.2% of the 118 registered funds recorded positive growth in January 2021.
A mutual fund is a type of financial vehicle made up of a pool of money collected from various investors, with the aim of investing them in securities like stocks, bonds, money market instruments, and other assets.
According to SEC, a total of 118 mutual funds were registered as of January 29, 2021, with a net asset value of N1.57 trillion across several fund types.
Nairametrics tracked the performance of these mutual funds by comparing the fund prices as of 31st December, 2020 with the fund prices as of the last trading day of January 2021.
Below were the top-performing mutual funds in the month of January 2021. We also highlighted their performance in terms of changes in net asset value and included profiles of the funds as described on their websites.
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Lotus Capital Halal ETF – Lotus Capital Limited (Exchange Traded Fund)
The Lotus Halal Equity Exchange Traded Fund “LHE ETF” is an open-ended fund that tracks the performance of the NSE-Lotus Islamic Index (NSELII). It is designed to enable investors obtain market exposure to the securities of the constituent companies of the NSE-Lotus Islamic Index and to replicate the price and yield performance of the index.
December 31st, 2020
Fund Price – N12.73
January 29th, 2021
Fund Price – N13.66
Return – 7.31%
Ranking – Fifth
Commentary: This is an Exchange Traded Fund by Lotus Capital Limited, which grew by 7.31% in the month of January. The fund also grew significantly by 51.7% in the year 2020, indicating that the fund is a delight to its investors. Also, the net asset value stood at N655.04 million as of 29th January, 2021, indicating 6.76% growth compared to N613.59 million recorded as of 31st December, 2020.
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Stanbic IBTC Aggressive Fund – Stanbic IBTC Asset Mgt. Limited (Equity Based Funds)
The Stanbic IBTC Aggressive Fund (SIAF), which was launched in June 2012, is an open-ended fund that invests a minimum of 60% of its portfolio in equities of companies listed on the Nigerian Stock Exchange (NSE) and a maximum of 40% in fixed income securities. Notably, the expense ratio for the fund is 1.5%.
December 31st, 2020
Fund Price – N2,525.55
January 29th, 2021
Fund Price – N2,713.93
Return – 7.46%
Ranking – Fourth
Commentary: Stanbic IBTC Aggressive Fund is the second-best performing Equity-Based fund in the month of January, growing by 7.46% to stand at N2,713.93 as of 29th of January, 2021. The net asset value also grew by 7.43% to close at N340.8 million.
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FSDH Dollar Fund – FSDH Asset Management Ltd. (Fixed Income Funds)
This is an open-ended mutual fund that invests in US Dollar denominated Fixed Income Securities issued by Nigerian Sovereign and Corporate Entities. The objective of the fund is to provide customers with the opportunity to invest in dollar-denominated instruments. Meanwhile, the minimum amount required to invest in the fund is $1,000.
December 31st, 2020
Fund Price – N415.1
January 29th, 2021
Fund Price – N447.7
Return – 7.85%
Ranking – Third
Commentary: The fixed income fund managed by FSDH Asset Management, recorded growth of 7.85% in January from N415.1 recorded as of the end of 2020 to stand at N447.7 at the end of January. The net asset value grew by 18.41% to close at N1.002 billion.
Paramount Equity Fund – Chapel Hill Denham Mgt. Limited (Equity-based Fund)
Paramount Equity Fund is Nigeria’s oldest mutual fund, which invests in a broad range of high-quality equities and fixed income securities. The fund aims to provide an investment vehicle that will enable unit holders to achieve consistent capital appreciation over a medium-to-long term.
December 31st, 2020
Fund Price – N16.27
January 29th, 2021
Fund Price – N17.56
Return – 7.93%
Ranking – Second
Commentary: This is an Equity Based Fund managed by Chapel Hill Denham Management, which grew by 7.93% in the month of January 2021 to stand at N17.56 as of 29th of January 2021, while the net asset value grew by 8.22% to stand at N598.19 million.
Vantage Dollar Fund – Investment One Funds Management (Fixed Income Fund)
Vantage Dollar Fund is an open-ended Unit Trust Scheme by Investment One Funds. The Fund seeks to provide investors with a bias for Dollar denominated securities an access to such securities, which ordinarily would be inaccessible to them by virtue of the minimum amount typically required to make such investments.
December 31st, 2020
Fund Price – N559.87
January 29th, 2021
Fund Price – N502.9
Return – 11.33%
Ranking – First
Commentary: This is the best performing mutual fund in the month of January 2021 and the only fund with a double-figure yield in the month under review. Vantage Dollar Fund grew by 11.33% to stand at N502.9 as of 29th of January 2021 while the net asset value also grew by 10.93%. This is quite an impressive performance as the fund primarily invests in Corporate and Sovereign Eurobonds.
Bubbling under……
The following funds make up the rest of the top 10 our list in ascending order:
AXA Mansard Equity Income Fund – AXA Mansard Investments Limited (Equity Based Fund)
Return – 6.69%
VETBANK ETF – Vetiva Fund Managers Limited (Exchange Traded Fund)
Return – 6.82%
PACAM Equity Fund – PAC Asset Management Limited (Equity Based Fund)
Return – 6.86%
Legacy Equity Fund – First City Asset Management (Equity Based Fund)
Return – 7.14%
VCG ETF – Vetiva Fund Managers Limited (Exchange Traded Fund)
Return – 7.16%
