DV Balanced Fund, one of the funds being managed by Vetiva Fund Managers Ltd, returned 6.19% for the fiscal year ending June 30th. The fund slightly underperformed its bench mark, S&P Nigeria Sovereign Bond Index, which returned 7.5% for the corresponding period. The fund, however, grossly outperformed the Nigeria All-Share Index’s return of .09%.

True to its name as a balanced fund, DV Balanced fund allocated 32.38% of its assets to Equities, 41.72% to money market securities, 25.73% to fixed income and 0.53% to cash as at June ending. The fund’s equity exposure seems to be weighted heavily towards the banking industry as its 5 top equity investments reveals that it invested 3.7% in Dangote Cement, 3.68% in Zenith Bank, 3.61% in Guaranty Trust Bank, 3.24% in UBA and 3.08% in Access Bank.

The fund underwent some rebalancing in its equity investments in the second quarter compared to first quarter. In anticipation for a poor performance from the equity market, the fund manager reduced exposure from 35% in March to 32% in June while increasing allocation to fixed income securities and cash holdings exposure to bank stocks remained the same.

While the fund’s allocation to Equities, Fixed income and Cash are within the asset allocation policy as contained in the prospectus, its allocation to money market securities seem to be way above the stated policy.

However, our analysts determined that though the allocation to money market instruments exceeds the policy provision, it is still within the purview of permissible allocation as a clause in the prospectus seems to have taken care of the policy shift, as such clause says that asset allocations could be exceeded, at the discretion of the fund manager.

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