Summary of returns on investment (ROI) of mutual funds in 2022

Money Counsellors, in partnership with Nairametrics, presents a summary of the returns on investments (ROI) of mutual funds in 2022.

Four new funds were launched in December. 3 by Cowry Treasurers Limited – the Cowry Balanced Fund, the Cowry Equity Fund and the Cowry Fixed Income Fund, and 1 by United Capital – the United Capital Global Fixed Income Fund. This brings the total number of publicly available, SEC-regulated mutual funds to 148.

Assets under management of all mutual funds combined closed 2022 at N1.518trn, up by N113.25bn from N1.405trn in December 2021, an 8.06% rise. There are 10 classes of mutual funds you as an investor can choose from.

So whether it’s for parking funds that will be needed soon (Money Market Funds) or you want to invest in accordance with your ethical beliefs (Ethical Funds) or in accordance with your faith (Shari’ah Compliant Funds) or you want to diversify away from the local currency (USD Funds), to name a few, there’s a fund for everyone. But choose wisely. Our advice is to research and analyse before you buy and monitor and appraise during your holding period. Most importantly have an objective/goal/purpose/aim for investing and know risk appetite.

Performance of mutual funds for December 2022

Balanced Funds

If you do not want to take too much risk, balanced funds, also known as mixed funds, might be your answer. Balanced funds are mutual funds that invest in a mix of investment instruments that range from money market instruments, bonds, equities and at times real estate and other assets. The proportion and mix of such assets in a portfolio will vary with income and gains/losses coming from each asset class.

Bond/Fixed Income Funds

If you are uncomfortable with having equities in an investment portfolio and prefer a regular source of and fixed income, bond/fixed income funds may be just for you. Bond/Fixed Income funds are mutual funds that invest in a portfolio of debt instruments issued by governments, companies, and other entities. Examples of such instruments include FGN Bonds, State government bonds, Eurobonds, and Corporate bonds and may include others like Commercial papers and Treasury Bills.

Some of the instruments may pay a fixed level of cash flows at pre-scheduled intervals over time. The funds will likely make periodic dividend payments from interest earned and sometimes capital appreciation earned from the funds underlying instruments.

Equity Funds

If you have a long investment horizon and can cope with the up and down gyrations of an equity market, then equity funds may just be for you. In the real sense, these funds should invest 100% of their funds in the equity market. However, equity funds in Nigeria leave the back door open for them to be able to invest in fixed-income instruments. Equity funds are mutual funds that invest primarily and mostly in shares.

ETF’s

A low-cost way of getting exposure to the market is via an Exchange Traded Fund. An Exchange Traded Fund, popularly known as ETF is a security that is listed and traded throughout the day on the stock exchange. This security is made up of a portfolio of securities in the fund that tracks an underlying index.

We cannot report on the performance of ETFs as there are differences between the prices published by the main source of our data when compared to other sources including that of operators. We will resume reporting and analysis as soon as we can.

Ethical Funds

Ethical funds are mutual funds where investment decisions are made after taking into consideration some agreed ethical factors. Such factors can be set from a religious, environmental, social, governance or another moral perspective

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Infrastructure Funds

An Infrastructure fund will provide you opportunities to invest in infrastructure which could range from toll roads, airports, and rail facilities to power, telecoms and other utilities but is not limited to such.

Money Market Funds

Money market mutual funds are low-risk funds that invest in money market instruments such as treasury bills, commercial papers, bank deposits, etc. With current regulations, no instrument in the fund should have a maturity of more than 364 days, and an average maturity of no more than 90 days.

Money Market Funds are required to maintain a stable NAV, i.e., the price should not fall below the issue price. All income is distributed out to investors, though an investor may choose to reinvest their income.

Real Estate Funds

Real Estate investment funds, also known as Real Estate Investment Trusts (REITs) are funds that own operate and maintain income-producing properties (real estate). They generate a steady stream of income for investors and may offer some capital appreciation too.

Shari’ah Compliant Funds

Shari’ah-compliant funds are mutual funds setup to comply with Islamic law. These funds allow investors to invest their money in instruments and companies that engage in behaviour according to Shari’ah law.

USD Funds

USD funds are funds that invest in US$-denominated instruments, e.g., Eurobonds, US$ bank deposits, etc.

Click on each respective class of fund grouping to access and view all the funds and their managers

Do you have a pension or thinking of opening a Retirement Savings Account for your pension with a PFA? Click here to read our December 2022 report on the performance of pension funds for 2022.

You can also review the 5-year performance of each PFA and the funds they manage by clicking here to download the Money Counsellors Annual Report on Pensions.

Our data and information provided are based on public data, our regulatory intelligence effort, our archives, and other public sources such as Fund Managers, FMAN, Pension Fund Administrators (PFAs), PenOp, etc. We have taken care to ensure that the information is correct, but MoneyCounsellors neither warrants, represents, nor guarantees the information’s contents, nor does it accept responsibility for any errors, inaccuracies, omissions, or inconsistencies contained herein. Because past performance does not predict future performance, it should not be used to make an investment decision.

We make no product recommendations. No news or research item on our website or in this document should be interpreted as a personal recommendation to buy, sell, or switch any investment. Investments and the income generated by the rise and fall in value, so you may receive more or less than you invested.

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