The obsession for foreign currency, specifically the US Dollar, has driven investors towards dollar denominated financial assets in the mutual funds segment resulting in an all time growth rate of 81.5% year-on-year, YoY, in the segment in the first nine months of 2024, 9M'24. The funds hit N3.5 trillion, up from N1.938 trillion in the corresponding period of 2023, 9M'23.
This growth rate is also coming at the backdrop of 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 Securities and Exchange Commission, SEC, data showed that Dollar Funds led other Funds recording N1.677 trillion and accounted for 47.7% of the total Fund's value.
It was trailed by Money Market Funds posting N1.391 trillion and accounted for 28.97% of the total value of the Mutual Funds.
Bond/Fixed Income Fund occupied the third position posting N215. 016billion and represented 6.1% of the total value of Mutual Funds.
Mutual Funds are professionally managed funds by asset management firms that pool funds from a group of people that are in low, medium and high classes and invest their money in venture capital, portfolio of stocks, bonds and other securities.
Commenting on the growth in Mutual Funds, 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.
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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 that have also encouraged investors to seek higher returns through mutual fund investments."
Victor Chiazor, Head of Research and Investment at FSL Securities Limited, said: "The major reason any investment is made by organisations or individuals is for return on investment (ROI). Once yields on any investment drops, the rationale thing for any investor to do is to search for higher yielding assets and rebalance their portfolio.
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 had over-performed the equities market within the period under review.
"The high interest regime and the recent monetary reforms by the present administration have also contributed immensely to attract investors into the market."
