Best ways to legally reduce tax for your business | EMM
Unilever Nigeria declares loss of N1.59 billion in 2020
Dangote, Rabiu, Adenuga make top 10 on Forbes’ Africa billionaires list
Veteran talk-show host, Larry King dies at 87
53,460 3G and 4G Base Transceiver Stations (BTS) deployed in Nigeria – Prof. Danbatta
These are Nigerian stocks Warren Buffett may likely buy
Elon Musk to offer $100 million prize for best carbon capture technology
Unilever Overseas Holdings acquires N352 million worth of shares of Nigerian subsidiary
94% of Bitcoin investors are making money
UBA, WAPCO, NEM drop amid profit-taking
Funds Management
58,800 contributors registered under micro pension plan – PENCOM Report
PenCom has registered 58,800 contributors under Micro Pension plan (MPP), since inception.
Funds Management
PFAs investment in FGN securities rises by 3.7% in November 2020
RSA registration marginally increased by 0.17% to 9,188,475 as at November 2020.
The Pension Fund Administrators (PFAs) have increased their investments in Federal Government of Nigeria securities by 3.7% to N8.14 trillion in November 2020.
This is according to recent data from the National Pension Commission (PenCom), which revealed that the amount invested by PFAs on FGN securities including; Bonds, Treasury Bills, etc., increased from N7.85 trillion as of October 2020 to N8.14 trillion by the end of November 2020.
Key highlights
The breakdown of the amount invested on various FGN securities within the period under review are:
- FGN Bonds got the lion’s share of N7.38 trillion as of November 2020, accounting for 90.7% of the total amount invested in FGN securities for the aforementioned month. This indicates a growth of 4.3% Month-on-Month.
- Investment in Sukuk bond increased to N100.07 billion in November 2020, up by +6.9% Month-on-Month.
- Investment in Treasury Bills declined to N642.03 billion, down by -1.7% Month-on-Month.
- Investment in Agency bonds also declined to N6.03 billion, down by 50.9% Month-on-Month.
- Investment in green bonds declined to N11.8 billion, down by 10.6% Month-on-Month.
- Investment in state government securities stood at N150.59 billion, down by 2.5% Month-on-Month.
Read Also: Pension Fund Assets hits N9.3 trillion as investment in FGN securities drops
Upshots: The increased investment in FGN securities by PFAs within the aforementioned period might be attributable to an earlier order by CBN which prohibited PFAs from OMO Auctions. The order redirected the investment focus of most PFAs, with many opting for other low-risk FGN securities, possibly explaining why the increase occurred.
What you should know: Nairametrics had earlier reported that CBN had restricted OMO auctions to banks and foreign investors.
- The Net asset value of all PFAs in the country as of November 2020 stood at N12.3 trillion, marginally up by +1.98% Month-on-Month.
- Total RSA registration for the aforementioned period also increased by 0.17% to 9,188,475.
Debt Securities
Nigeria’s pension funds continue to divest from treasury bills
Since the beginning of 2020, pension fund managers have moved out about N1.112 trillion of treasury bills investments into mostly FGN Bonds.
As the low-interest regime that characterized most of 2020 continues with no immediate sign of an increase, pension fund managers have also continued to rid their portfolios of treasury bill investments.
Analysis of the recently released September 2020 edition of Pension Fund assets, by the Pension Commission of Nigeria, PenCom, shows that pension fund managers reallocated their assets away from treasury bills to FGN Bonds.
READ: Nigeria’s Micro Pension industry: A gold mine waiting to be tapped
In the month of September 2020, according to the latest report, pension fund managers closed out of treasury bill positions worth N0.224 trillion while loading up on FGN bonds worth N0.254 trillion. Since the beginning of 2020, pension fund managers have moved out about N1.112 trillion of treasury bills investments into mostly FGN Bonds.
READ: FG posts 27% revenue shortfall in 2020 as budget deficit hit N6.1 trillion
At the beginning of 2020, total pension fund assets invested in treasury bills stood at N1.88 trillion, but that has fallen to N0.78 trillion as at the end of September 2020. Put in another way, as at the end of 2019, 18.4% of pension fund assets were invested in treasury bills but as at September 30, 2020, pension funds’ treasury bill investment stood at 6.7%
READ: Pension Fund Assets hits N9.3 trillion as investment in FGN securities drops
Implications for domestic borrowing and monetary policy
Treasury bills serve a whole lot of purposes for the government. They are used as a means for the government to borrow to cover short term budgetary deficits as well as a means for the Central Bank to manage the supply of money and its inflationary effects.
READ: Worry for PFAs as pandemic-induced unemployment lowers new pension accounts
With the increasing and seeming lack of interest by pension fund managers, who, usually are big players in the treasury bill market, the government may find it a bit problematic raising the much-needed domestic borrowing from them.
READ: Nigeria’s Eurobond yield hit 12.8% as investors flee emerging markets
In like vein, the Central Bank’s ability to implement monetary policies through treasury bills and others, open market operation, may also suffer. May be, fiscal policy may become a more potent instrument of economic management, if that happens.
Funds Management
Nigeria’s Mutual Fund asset value grew by 50% in 2020
2020 appears to be the year with the highest growth in the value of mutual fund assets in Nigeria.
While the year 2020 will go down in the annals of history as one of the worst years in the history of mankind, it was not so bad for the Nigerian mutual fund industry.
Interestingly, 2020 appears to be the year with the highest growth in the value of mutual fund assets in Nigeria.
According to data from the Security and Exchange Commission, SEC, the total value of mutual funds in Nigeria stood at N1.042 trillion as at the end of 2019. The same data source now shows that as at the end of 2020, the net asset value, NAV of Nigerian mutual fund had risen to N1.572 trillion, representing an increase of 50.79%.
READ: How to redeem your unclaimed dividends in Nigeria
A deeper analysis of the industry reveals that in 2020, mutual fund contributions amounted to about N0.903 trillion while redemptions amounted to about N0.42 trillion. The same analysis points to the fact that mutual funds gathered an estimated sum of N46.7 billion in gains.
READ: Best Mutual Funds in Nigeria
Compared to 2019, the capital activities, comprising of subscriptions and redemptions were slightly far afield. In 2019, subscriptions stood at N0.52 trillion while redemptions came up to N0.14 trillion, resulting in a net inflow of N0.38 trillion. Net inflows for 2020 stands at N0.483 trillion. Unlike in 2019, when mutual funds made an estimated gain of N9.9 billion, the N46.7 billion made in 2020, makes Corona Virus a non-issue for the industry.
READ: Where to buy Real Estate in Lagos in 2021
Majority of the funds ended 2020 in the black, as 15, out of the 118 mutual funds on the SEC’s NAV Summary Report. The good thing about it is that no particular fund group dominated in making gains.
READ: Nigeria’s Asset to GDP Ratio Is low despite rise in Mutual Fund value
Although most of the funds that recorded huge gains came from the Euro Dollar category, Bond and Fixed income funds were not left behind as a whole lot of them stood out with mouth-watering gains. Out of nowhere, Stanbic IBTC Nigeria Equity fund sneaked in with some sizable gains too.
READ: How risky is your Mutual Fund?
On the downside, the two funds that recorded the greatest losses came from the Real Estate Investment fund category. Apparently, the Real Estate Investment Trust funds have not been doing good. Be that as it may, it is laudable that the Nigerian mutual fund industry stood out in 2020.
