Nigeria’s mutual fund assets hit N1.52 trillion in five months

Total Assets Under Management (AUM) of the mutual fund industry hit N1.52 trillion ($3.64billion) in the first five months of the year.

This represents 8.7 per cent growth when compared to 10.6 per cent decline in total assets in 2021.

One year after the publication of its report ‘Comparing Mutual Funds – Apples & Oranges’, Coronation Asset Management returns to the subject of comparing the performance of Nigeria’s mutual funds with its latest report titled ‘Comparing Mutual Funds II – Apples & Oranges, and a Hand Grenade’.

The asset management company said the report is a key investigation into the rapidly-growing N1.52 trillion mutual fund industry in Nigeria. This year, it takes a deep dive into the differences between the amortised accounting method, which most funds in Nigeria use, and the international mark-to-market accounting method, as applied to Fixed Income funds.

According to the report, the compound annual growth rate for the industry between 2015 and 2021 was 33 per cent, or 14 per cent per annum in inflation-adjusted terms.

Managing Director of Coronation Asset Management, Aigbovbioise Aig Imoukhuede said: “We are convinced that Nigerian savers are making the long-term transition from building savings with banks to a culture of saving with mutual funds.

“The report stated that at just 11 per cent of the size of the pension fund industry, the mutual fund industry needs to support its momentum with confidence-building measures, first among them the adoption of market-to-market accounting and Global Investment Performance Standards (GIPS),” he said.

Coronation’s Asset Management Head of Research, Guy Czartoryski pointed out that adopting GIPS would enable a true comparison between the performance of funds rather than the ‘Apples & Oranges’ we have now.’

“GIPS would open the door to credible fund comparison services such as Morningstar, Yodelar and the Financial Times fund comparison service. These advances would pave the way to significant industry expansion and international investor participation,” he said.

In 2020, NAV of 56 mutual funds listed on the Nigerian Exchange Limited (NGX) stood at N1.24 trillion at the end of 2020. This figure represents 88.3 per cent of the total NAV in the Nigerian capital market.

The number of registered mutual funds with the Securities and Exchange Commission (SEC) also grew from 76 in 2019 with a NAV of N600 billion to 102 with a NAV of over N1.43 trillion within the same period.

The high level of professionalism and quality of mutual funds in Nigeria has elicited increased patronage and subscription rate by individuals, retail and institutional I investors.

Indeed, active portfolio management by experienced professionals offers investors better prospects for their investment, especially in periods of market volatility and the economic downturn as is being experienced in Nigeria, making mutual funds an optimal choice.