Nigerian Exchange Traded Funds (ETFs) closed 2022 on a positive note with an average return on investment of 5.4%. This is according to an analysis of data compiled by the Nigerian Securities and Exchange Commission (SEC).
According to the analysis, the twelve listed ETFs increased their aggregate market capitalization from N6.99 billion as of 31st December 2021 to N7.22 billion by the end of 2022, indicating a 3.1% year-on-year increase.
Further analysis showed that eight of the twelve listed ETFs recorded positive returns, while four printed losses. However, only two of the funds recorded real positive returns, that is surpassed the annual inflation rate of 18.53%.
What are ETFs: Exchange Traded Funds are tradable investment products (like stocks) whose returns track the performance of an underlying index.
An ETF holds assets such as Equities, Bonds, Currencies, Commodities Real Estate, etc and its return should closely align with the returns of the underlying index, save for trading costs, etc.
ETFs give investors an efficient way to diversify their portfolios, without having to select individual stocks or bonds. They cover most major asset classes and sectors, offering investors a broad selection.
Stanbic IBTC ETF 30 Fund – 52.9%
The Stanbic IBTC ETF 30 Fund is an open-ended fund with the aim of replicating as closely as possible, before fees and expenses the net return of the NGX 30 index.
The Fund seeks to achieve this by investing primarily in securities issued by companies listed in the NGX 30.
The fund gained 52.9% in 2022 to close at N104.76 per unit as of 30th December 2022 compared to N68.5 recorded as of the beginning of the year.
On the other hand, the market capitalization of the fund dipped 3.6% to close at N446.97 million from N463.59 million.
Meanwhile, the NGX-30 index of the Nigerian equities market gained 6.96% in 2022, higher than the 5.01% printed in the previous year.
Vetiva Industrial ETF – 19.6%
The Vetiva Industrial ETF “VETIND ETF” is an open-ended Exchange Traded Fund managed by Vetiva Fund Managers Limited. The VETIND ETF is designed to track the performance of the constituent companies of the NGX Industrial Index and to replicate the price and yield performance of the Index.
The NGX Industrial Index comprises the top 10 companies in the Industrial sector listed on the Nigerian Exchange Limited (“NGX”) in terms of market capitalization and liquidity and is a price index weighted by adjusted market capitalization.
The fund price closed the year at N24.13 per unit from N20.18 traded as of the beginning of the year, indicating an annual return of 19.6%.
In the same vein, the market capitalization also increased by 19.5% during the year to close at N252.53 million, compared to N211.27 million as of 31st December 2021.
Data from the Nigerian Exchange showed that the NGX industrial goods index printed an annual gain of 19.67% in 2022 compared to the 2.15% decline recorded in the previous year.
Lotus Capital Halal ETF – 15.6%
The Lotus Halal Equity Exchange Traded Fund “LHE ETF” is an open-ended fund that tracks the performance of the NGX-Lotus Islamic Index (NGXLII).
The fund is designed to enable investors to obtain market exposure to the securities of the constituent companies of the NGX-Lotus Islamic Index and to replicate the price and yield performance of the index.
The Lotus Halal ETF recorded an annual return on investment of 15.6%, ranking as the third best performing Exchange Traded Fund in 2022. Also, the market capitalization gained 15.6% to close the year at N516.67 million.
NGX Lotus II index gained 7.69% in the review year.