By Chinwendu Obienyi
The year 2020 appeared to be the year with the highest growth in the value of mutual fund assets in Nigeria as it rose by 51 per cent to N1.57 trillion.
The Securities and Exchange Commission (SEC) had projected that Collective Investment Scheme (CIS) or mutual funds on the capital market would hit N1.5 trillion before the end of the year.
CIS also known as mutual funds is an arranged pool of funds managed on behalf of investors by a professional money manager which may invest in ventures capital, stocks, bonds and other securities.
The then Acting Director-General SEC, Ms Mary Uduk, had said that the commission was setting up more strategies to develop the mutual fund segment at the Nigerian capital market.
Uduk who was represented by the Head, Office of Economics at SEC, Okey Umeano, noted that the segment which stood at N1.2 trillion was growing and urged retail investors to use the funds as a means to access the market.
However, according to the Net Asset Value (NAV) and Unit Price data (as at December 31, 2020) obtained from the SEC’s website, the net asset value of Nigerian mutual funds has risen to N1.572 trillion, representing an increase of 50.79 per cent.
A deeper analysis reveals that in 2020, mutual funds 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, while subscriptions stood at N0.52 trillion while redemptions came up to N0.14 trillion, resulting in a net inflow of N0.38 trillion in 2019.
Further analysis reveal that net inflows for 2020 stood at N0.48 trillion unlike in 2019, when mutual funds made an estimated gain of N9.9 billion, the N46.7 billion made in 2020, makes COVID-19 a non-issue for the industry.
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.
According to Umeano, “the mutual funds may not have very high returns but definitely, it won’t have low returns, and with the SEC at the forefront of financial inclusion, we are pushing collective investment scheme because it brings some form of stability for investments”.
Meanwhile, Nigeria’s domestic equities market began the week on a positive note as the main index grew by 0.08 per cent to close at 40,150.78 points.
Monday’s positive performance was driven by buying interest in Zenith Bank, International Breweries and Flourmill even as market capitalisation grew by N16 billion to close at N20.994 trillion while year-to-date (YTD) return improved to -0.3 per cent.
In the same vein, the volume of transactions rose by 0.7 per cent to 335.69 million units while the value fell by 31.8 per cent to N2.48 billion, exchanged in 5,338 deals.
Mutual Benefits was the active stock, selling over 104.16 million shares valued at N31.03 million, Mansard transacted 26.34 million shares worth N30.43 million, while WAPCO sold 14.38 million shares worth N320.53 million.