Regulated mutual funds hit N1.48trn in 11 months

By Chinwendu Obienyi

Total Net Asset Value (NAV) of all regulated mutual funds in Nigeria has rose to N1.48 trillion as at December 2, 2022 from N1.41 trillion recorded in December 31, 2021, data from the Securities and Exchange Commission (SEC) revealed.

According to the Commission, this represents a 5.19 per cent gain which was driven by the growth in Money Market funds (+7.30 per cent) Year-to-Date (YTD) from N547.91 billion to N587.90 billion and Dollar funds (+20.11 per cent YTD) from N272.19 billion to N326.92 billion.

Investor sentiments has been on a rollercoaster across Nigeria’s financial markets this year. It will be recalled that the equities market began with a January rally and this extended into most of the first half of the year with the benchmark index peaking at 54,085.30 points on 27 May (its highest level since 15 July 2008). 

However, the market corrected from mid-year and was just shy of a bear market by October 30, 2022 before staging a year-end rally.

However, money market instruments witnessed growth particularly during September and October 2022. By contrast, Fixed Income & Bond Funds fell slightly in size.

According to analysts at Coronation Research, the increase in mutual funds was due to risk-off and flight-to-safety sentiments which was responsible for the growth in these funds.

“These funds now make up 62 per cent of all regulated mutual funds’total Net Asset Value. The development of Fixed Income and Bond Funds, has been volatile over the course of the year, eventually recording a decline of 9.48 per cent year-to-date. 

Looking at the distribution of all regulated mutual funds by type from 2020 to 2022, we are seeing a gradual shift in appetite from Fixed Income & Bond Funds into Dollar funds. 

The percentage of the industry accounted for by Dollar Funds has more than doubled in two years from 10.67 per cent to 22.12 per cent, while Fixed Income & Bond Funds have shrunk from 30.47 per cent to 23.12 per cent”, they said.

Speaking on the outlook of the mutual fund industry, the analysts said given that general elections are due in February, they expect the riskoff sentiment to heighten as the election nears and expect this to drive growth in mutual funds, especially Money Market and Dollar Funds.

“Barring any unanticipated moves by the CBN to influence system liquidity, or any other extraneous event that could affect market yields, our expectations remain that Naira rates are likely to continue rising next year.”