As we enter the second month of the year, if you’ve followed our January investment guide, you’re likely seeing some positive momentum. February offers another opportunity:
- Start fresh if you haven’t invested yet.
- Consolidate and rebalance if you already have positions in place.
This process goes beyond simply picking “hot” stocks or subscribing to government securities. The strategy remains the same: Define your investment objectives clearly.
For most investors, the goal is not only to beat inflation but to earn a premium above inflation that adequately compensates for risk, especially when taking positions in riskier assets like corporate bonds, equities, mutual funds, or exchange-traded funds (ETFs).
Put differently, if Federal Government securities such as Treasury bills, savings bonds, or FGN bonds are offering yields of, say, 18%, then other asset classes outside government paper should reasonably deliver at least 23% or more.
That additional return is compensation for risks such as credit risk, default risk, and market volatility.
Inflation-adjusted target return
Currently, inflation has been revised to 15.15% and could rise to 16.5%. Meanwhile, the monetary policy rate (MPR) is 27%, though a potential rate cut is expected if inflation continues to ease.
Given these assumptions, we adjust our inflation-adjusted target return to at least 25%, and preferably higher. This makes 30%, our base return case for February 2026.
To achieve this target, you must allocate funds to high-return asset classes, especially equities and equity-based mutual funds, while using safer assets like Treasury bills to balance risk.
Recommended portfolio allocation
Equities (N4.8million– 48%)
We increased our equities allocation to 48% from 40%, driven by expected macroeconomic changes and the Nigerian stock market’s attractiveness for inflation-beating assets.
In 2025, the Nigerian All Share Index (ASI) posted an impressive 51.19% return, its best performance since 2007.
Coming into 2026, the market has already gained 6.27% in January, with 44 stocks delivering 20%+ YTD gains, a strong start compared to 1.53% in January 2025.
Banking (N1.5 million)
For January, we recommended investing N1.5 million in banking stocks like Zenith Bank, Wema Bank, GTCO, UBA, and FirstHoldCo.
These stocks have delivered gains of 6% to 16% in January, with Zenith Bank leading with over 16%. We still recommend the same allocation to N1.5 million, but add Stanbic IBTC, FCMB, and Access Holdco.
The banking sector remains undervalued with healthy trading liquidity, making it an easy entry for potential investors.
Agriculture (N1 million – Presco, Okomu Oil)
Agriculture remains one of the top-performing sectors, with Presco and Okomu Oil delivering 205% and 146% returns in 2025, respectively.
These palm oil companies gained over 10% in January 2026, showing continued strong growth. With solid market share and fundamentals, both companies are expected to declare final dividends for 2025 in Q1 2026, likely ranging between N10 – N15 per share.
By investing N1 million in these stocks, you position yourself for both capital appreciation and steady dividend income, with an expected 50%–100% return.
Oil & Gas (N1 Million – Seplat Energy, Aradel Holdings)
The Oil & Gas sector faced some challenges in 2025, with the NGX Oil & Gas index recording a negative return of -1.54%.
However, the sector has started strong in 2026, with the index gaining 13.8% in January, driven by Seplat Energy and Aradel Holdings.
Both companies offer impressive dividend payouts, making them attractive for income-focused investors while still showing strong performance potential in 2026.
N1.3 million in selected stocks across various sectors
You can also allocate N1.3 million across other sectors, such as ICT, consumer goods, and industrial, picking stocks like MTN Nigeria, BUA Foods, and Dangote Cement and other stocks with upside potential, such as Academy Press, Custodian Investment, and NEM Insurance
These stocks have strong fundamentals, solid growth potential, and are expected to provide both capital appreciation and consistent dividends in 2026.
A blend of the spread in equities is expected to offer 40% from the N10 million investment, offering N1.92 million.
Equity-based mutual funds (N1.7million– 17%)
Allocating N1.7 million (17% of the portfolio) to equity-based mutual funds is a strategic choice, given the strong performance of these funds in 2025.
The average YTD yield in 2025 was 54%, compared to 32% in 2024.
We recommend the following funds based on their impressive returns, NAV, and management quality:
- Stanbic IBTC Nigerian Equity Fund: 65% return in 2025, with a N24 billion NAV. This fund offers diversified exposure to Nigerian equities.
- Zrosk Magna Equity Fund: 74% return in 2025, with an NAV of N9 billion, making it a strong performer with high-conviction stock selection.
- Chapel Hill Denham: 64% return, N7 billion NAV, and over 8,900 unit holders, showing strong retail support and consistency.
We expect this asset class to deliver 30% return in 2026, making it an important part of the portfolio.
Fixed income (N2.2million– 22%)
Given the current high interest rates and the potential for an inflation-driven rate cut, 22% of the portfolio should be allocated to fixed-income assets like Treasury Bills, FGN Bonds, and savings bonds.
Although fixed income returns are lower, they provide stability, income, and principal protection, which is vital for managing overall portfolio risk.
The expected yield is 14%, which is conservative, but still attractive given the current MPR and bond yields.
Alternativeassets (N1.3million – 13%)
Alternative Assets, including cryptocurrencies and commodities, are crucial for targeting higher returns but come with elevated risk.
This asset class is expected to yield 30% in 2026, offering significant upside, particularly as global markets evolve.
However, it is highly volatile, so it’s important to keep exposure under control.
Bottomline
This portfolio is structured to achieve a 30%+ return in 2026 by balancing high-growth equity assets with defensive fixed-income positions.
It is diversified across four asset classes: equities, mutual funds, fixed income and alternative assets, ensuring that you’re well-positioned for both capital appreciation and steady income.
