High interest rate environment drives up Mutual Funds’ investment by 77%

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The total Net Asset Value, NAV, of investment in Mutual Funds rose Year-on-Year, YoY, by 76.9 per cent to N2.3 trillion in January, 2024, from N1.32 trillion in the corresponding period of 2023.

The increase is driven by the high interest rate on fixed income instruments and the upward performance of the stock market, as well as increased awareness on benefits of Mutual Funds.

Vanguard’s findings from the data compiled by the Securities and Exchange Commission, SEC, showed that Money Market Funds, MMF, led other Funds recording N949.7 billion and accounted for 41.69% of the total Fund’s valu

It was followed by Dollar Funds posting N804.11 billion and accounting for 35.3% of the total value of the Mutual Funds.

Bond/Fixed Income Fund occupied the third position posting N287.14billion and representing 12.6% of the total value of the Funds.

Mutual Funds are investment outlets professionally managed by asset management firms that pool funds from people and invest in venture capital, portfolio of stocks, bonds and other securities.

Giving insight into the developments in this segment of the financial market, Michael Oyebola, the Chief Executive Officer,  MoneyCounsellors, said: “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.

Mutual funds pool money from various investors and invest in a diversified portfolio of securities, providing investors with an opportunity to participate in the financial markets without needing extensive knowledge or experience. The substantial growth in the mutual fund industry can be attributed to various factors; including some level of increased financial literacy among the population as well as the ongoing bull market have also encouraged investors to seek higher returns through mutual fund investments.”

Commenting on the rising profile of Mutual Funds, Analyst and Vice Executive Chairman, HighCap Securities Limited, David Adonri, said: “The growth in NAV of Mutual Funds is impressive as some of the funds even outperformed the equities. This also indicates that the funds were managed conservatively. They may have been weighted more towards debt.

“The high interest regime and the recent monetary reforms by the present administration have also contributed immensely to attract investors into the Mutual Funds market.”


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