FX Demands Triggers 79.4% Rise in Mutual Funds Asset to N3.8trn.

Keep up with the latest news and be part of our weekly giveaways and airtime sharing; follow our WhatsApp channel for more updates. Click to Follow us

Nigeria’s mutual funds have recorded significant growth, driven by investors’ appetite for foreign currency, particularly the US dollar. According to recent data from the Securities and Exchange Commission (SEC), mutual fund assets rose by 79.4% year-on-year to N3.829 trillion as of December 27, 2024, up from N2.134 trillion in the corresponding period of 2023.

The growth is attributed to the high interest rate on fixed-income instruments, the upward performance of the stock market, and increased awareness of the benefits of mutual funds. Dollar-denominated funds led the growth, recording N1.708 trillion and accounting for 44.6% of the total fund value. Money Market Funds followed with N1.680 trillion, representing 43.89% of the total value, while Bond/Fixed Income Funds recorded N196.299 billion, representing 5.13% of the total value.

In terms of yield, equity-based funds performed well, with Halo Asset Management Limited recording a 98.91% yield year-to-date. SCM Capital Limited followed with a 63.74% yield, while Valu Alliance, a balanced fund, recorded a 54.01% yield.

Commenting on the growth, Michael Oyebola, CEO of MoneyCounsellors, stated, “The Nigerian mutual fund landscape has evolved significantly over the past few years, transforming into a vibrant and accessible investment platform for both retail and institutional investors.”

Oyebola added that mutual funds provide investors with an opportunity to participate in the financial markets without needing extensive knowledge or experience. He attributed the growth to increased financial literacy and the ongoing bull market.

Victor Chiazor, Head of Research and Investment at FSL Securities Limited, noted: “The major reason any investment is made by organisations or individuals is for return on investment (ROI). Once yields on any investment drop, the rational thing for any investor to do is to search for higher-yielding assets and rebalance their portfolio.”

Chiazor also stated that the monetary policy of the Central Bank of Nigeria (CBN) favors fixed securities, given the persistent monetary policy rate (MPR) hike to tame inflation.

Please don’t forget to “Allow the notification” so you will be the first to get our gist when we publish it. 
Drop your comment in the section below, and don’t forget to share the post.