Investments in Mutual Funds Falls by 4.3% to N1.36 Trillion in March

Investments in Mutual Funds dropped by 4.3 per cent as total Net Asset Value, NAV, declined to N1.361 trillion in April 2021 from N1.420 trillion in March 2021.

Findings from the data released by the Securities and Exchange Commission, SEC, however, show that Money Market Funds, MMF, recorded the highest NAV in absolute terms rising to N525.5 billion from N584.5 billion in the month of March. The value represents 41.15 per cent of the total NAV in April.

Under the MMF, Stanbic IBTC Asset Management Limited was the most active player among the 26 players in the market recording N248.2 billion NAV representing 42.46 per cent of the sub-sector Fund.

It was followed by FBN Capital Asset Management posting N162.2 billion NAV, representing 27.76 per cent of the, while ARM Investment Managers Limited came third recording N167.9 billion.

In the report, the Fixed Income Funds, FIF, occupied the second position in the overall Mutual Funds scheme recording N469.6 billion as against N482.7 billion in March. This represents 43.50 per cent of the total value of NAV in April.

The FIF data shows that United Capital Fixed Income Fund was the most sought after, recording N141.7billion NAV, accounting for 30.17 per cent of the total FIF NAV, followed by ARM posting N121.5 billion, accounting for 25.87 per cent.

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The Bond Funds trailed behind the FIF posting N258.8 billion as against N255.5 billion in the previous month. This represents 19.01 per cent of the total NAV in April. The Bond Funds also showed that Stanbic IBTC Fund  was most actively traded posting N174.8 billion, followed by FBN Capital recording N35.2 billion.

Reacting to this development, analyst and Head of Investment, Fidelity Securities Limited, FSL said: “Capital flows over the last couple of months have been quiet aggressive, as investors have increased their search for higher returns on their investments.  For the later part of last year and early this year, investors saw Mutual Funds investments as a better investment alternative to investing in FGN instruments which had very low yields and locks you in for a long period as against Mutual Funds which gives you the flexibility of exiting after a few months while the yields keeps adjusting to current yields in the market.

Continuing he said: “At the moment, we have seen a few investment outlets offering higher returns than what is being offered by most mutual funds and this has triggered capital flows towards such outlets. This trend would definitely suck liquidity away from the mutual fund operators except they increase their yields to compete favourably with other financial institutions.”