A report by Coronation Asset Management Mutual Funds stated that Nigeria’s Mutual Funds Industry saw a 50 percent growth in 2020.
In the report titled, ‘Comparing Apples and Oranges Why Harmonised Reporting Is the Next Step Forward,’ the mutual funds firm noted that the industry rose to N1.6 trillion, according to Ripples Nigeria.
The author of the report, Guy Czartoryski, said that there was a sharp fall in market interest rates, “with the yield on a one-year Nigerian Treasury Bill (NTB) falling from 5.40 percent in January 2020 to 0.15 percent in early December 2020. It was difficult for investors to get good rates of interest from their bank deposits.
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“Last year, investors turned to Money Market funds, which are the biggest segment of the Mutual Fund industry but later they turned to Fixed Income funds because some of these were reporting good unit price gains during the year as interest rates fell and bond prices rose.”
He added that investors’ shift of focus to Fixed Income Funds from Money Market funds, boosted revenue for the industry.
Czartoryski said, “This attracted a lot of money into the mutual fund industry and its total assets under management rose by 50% to N1.6 trillion. In general, there is a long-term move from bank deposits to Mutual Funds because Mutual Funds deliver all their gains, less a small fee, to their investors, and investors are beginning to appreciate that.
“During our research what we found was that Unit Price data, which is supplied by the fund themselves is not comparable. Differences in reported performance are too large to be explained by differences in underlying performance in 2020. 2020 was a very good year for FGN bond prices. ”
