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Investments in mutual funds hit N174bn

By on January 19, 2015

The total value of mutual funds investment rose by N23.67bn or 15.7 per cent at the end of 2014.

At the end of trading in 2013, the value of investment in mutual funds, also known as Collective Investment Scheme, closed at N153.83bn.

A report obtained from the Securities and Exchange Commission on Friday showed that the value closed at N174.50bn at the end of last year.

SEC, with the Nigerian Stock Exchange and market operators, had in the last few years emphasised the wisdom of diversification through investment in mutual funds.

The CIS, usually managed by a fund manager, involves collecting money from different investors that have a common investment objective and reinvesting such funds.

It is a form of investment that is accessible to all, where each investor has a proportional stake based on how much money they have invested in the pool of funds.

The fund manager invests the money by buying treasury bills, stocks, bonds, or other securities, according to specific investment objectives that have been established for the scheme.

The immediate past Director-General, SEC, Ms. Arunma Oteh, had explained that mutual funds helped to reduce the risks of cautious investors and opened them to a variety of other options for investment.

She said that commission had rolled out guidelines aimed at increasing participation in that market, adding that the CIS was an investment platform with huge growth potential for investors interested in diversifying their risks.

She said, “We cannot overemphasise the importance of investing in the CIS and we have put in efforts aimed at strengthening the framework of the CIS investment. We are glad to note that there has been a lot of interest in the CIS of recent.

“Presently, we have huge investments in the CIS and we are tightening the regulation on this segment, because it is a real area of opportunities for investors who want to manage their risks. We hope to see more interest in that market in the next few months.”

The Managing Director, Highcap Securities Limited, Mr. David Adonri, said there was an increase in the participation of investors in the CIS because the scheme gave investors the opportunity of achieving their varying investment goals.

He said, “A major benefit of investing in the CIS is that they are structured to meet the differentiated investment goals of investors. These funds have trustees who represent the interest of investors while the fund manager is responsible for investing the funds in assets according to the goals of the scheme.

“Also, it is important to note that this investment scheme is ideal for passive and uninformed investors who rely on the professional expertise of the fund managers to meet their investment objectives.”

The Chief Executive, Stanbic IBTC Bank, Mr. Yinka Sanni, said mutual funds could also be beneficial to short-term investors, giving them the leverage to withdraw from the funds at a short notice when there is a pressing need.

“Investing in mutual funds are ideal for conservative investors attempting to optimise cash balances that may be required in a short period of time, as it usually has a capable investment management team with good level of experience and a well established investment process,” he stated.

 

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