Mutual fund is a collective investment scheme which allows investors to invest in a professionally managed diversified asset portfolio. This diversified portfolio may ranges from stocks, bonds, treasury bills, real estate, etc. under the guidance of a professional manager. Mutual fund in Nigeria is growing rapidly.
Very suitable for retail investors. However, an investor profiling of mutual funds in Nigeria will show that institutional investors dominate the space.
Benefits of Investing in Mutual Funds
Some of the benefits of investing in mutual funds include:
- Low price – it is affordable, you don’t need so much money to start investing
- Diversification – you have access to a broadly diversified asset class
- Reduced Risk –
- Simple – you don’t have to possess sophisticated investing knowledge to invest in mutual funds
- Accessibility – there’re variety of funds to buy and you can easily access them from your stockbrokers and fund managers
- Professional management – trained and experienced professionals manage your investment
In a nutshell, mutual funds are simple and flexible. They provide the ordinary individual with the opportunity to start investing and create wealth.
In this post, we take a look at the best mutual fund in Nigeria. To understand how mutual funds work, check out this other post How You Can Make Money By Investing In Mutual Funds.
Mutual Fund In Nigeria: Q1 Performance Review
Our review period is first quarter ending March 2021 and our rating is based on the rate of returns recorded by the funds in the market.
Performance of the mutual funds industry in the period under review reflected the general macroeconomic conditions. Hence, performance was bearish with only 25 out of the 118 listed mutual funds in Nigeria recording positive growth.
Fifty nine funds returned negative while 34 funds closed flat. Net Asset Value (NAV) of the listed funds depreciated 4.1%. This towed the line of the Nigeria Stock Exchange All Share Index which declined 3.6% within the same period.
Bond Funds recorded the highest growth of 14% followed by fixed income funds with a growth of 12%. Money Market Funds on the other hand declined the most at 20% negative returns.
source:Nairametrics.com
Best Funds to Buy
Based on returns within the period under review; here’re some of the best mutual funds to invest in2021 in Nigeria
#1. Vantage Balanced Fund
Vantage Balanced Fund is one of Investment-One Financial Services managed funds. And as at the time of writing this post, the fund has returned 19.19% to investors. It’s a mixed fund that invest in equities, money market, fixed income and real estates.
It’s one of the oldest funds in Nigeria that has made consistent returns to investors over the years. Minimum subscription to Investment One Vantage Balanced Fund is NGN10,000
#2. FBN Retail Bond Fund
The FBN Bond Fund is managed by FBN Quest Asset Management Ltd. The firm is the investment banking arm of the First Bank Nigeria Group. The fund invests in a debt instruments issued by the Federal Government of Nigeria, State Governments and highly rated corporate debt instruments.
It is targeted at both institutional and retail investors who desire to earn stable income. And also preserve their capital and invest for the medium to long term.
Minimum investment in the FBN Bond Fund is NGN50,000. Fund investors receive dividend every six months.
#3. FBN Eurobond Fund
This is another top rated mutual fund from the stable of FBN Quest Asset Management Ltd. The Fund invest in US Dollar denominated debt instruments issued by the Federal Government and corporate institutions. And investors get their returns in USD.
Minimum investment in FBN Eurobond Fund is USD2,500.
#4. FBN Institutional Eurobond Fund
This is a USD denominated fund. It’s primarily targeted at institutional investors looking income, growth and preservation. Minimum investment in this fund is USD100,000
#5. FSDH Dollar Fund
FSDH Dollar Fund is a product of FSDH Asset Management Ltd. The Fund Manager is the asset management arm of FSDH Merchant Bank.
The FSDH Dollar Fund invests in USD denominated fixed instruments. This fund was the third best performing mutual funds in Nigeria in the first quarter of 2021.
Minimum investment in the FSDH Dollar Fund is USD1,000.
#6. Investment One Vantage Dollar Fund
Investment One Financial Services Ltd is one of Nigeria’s leading investment firms and managers of Vantage Dollar Fund. Vantage Dollar Fund gives access to low income earners to invest in Eurobond and money market instruments.
This fund offers investors benefit of steady income as well as stability amidst foreign exchange volatility. Minimum investment in the fund is USD500.
#7. ARM Ethical Fund
ARM Ethical fund invests in financial products that are compliant with sharia principles. The fund will not invest in interest bearing transactions, alcohol production, gambling, arms and adult entertainment businesses.
So it appeals to investors who want to grow wealth strictly in accordance with Islamic Finance, then you have in ARM Ethical Fund.
ARM Investment Managers is the Manager of the fund. Minimum investment in ARM Ethical Fund is NGN10,000
#8. Zenith Ethical Fund
Year to date, Zenith Ethical Fund has returned about 9% and is riding in the top fund category with one of the highest returns. A product of Quantum Zenith Asset Management and Investment Ltd, the fund invests largely in Nigeria equities.
It aims to create long term wealth for investors by investing in ethically compliant assets in the Nigerian capital market.
Minimum investment in Zenith Ethical Fund is NGN25,000
#9. PACAM Balanced Fund
The PACAM Balanced Fund is a product of PAC Asset Management Ltd. The fund is a collective investment scheme. It pools resources and invest in a mix of assets such as equities, money market market and fixed income instruments. It also invest in real estates.
This mix offers the benefit of maximizing income for investors amongst these asset classes. Information available show that PACAM Balanced Fund has returned 7.5% ytd to place it amongst the top earning mutual funds in the period under review.
Minimum investment in the PACAM Balanced Fund is NGN50,000
#10. The Frontier Fund
The Frontier Fund is a unit trust scheme that aims to achieve capital appreciation for unit holders. It is a mixed fund that invests in equities and money market instruments. Managed by SCM Capital Asset Management Ltd, The Frontier Fund is aimed at achieving long term capital appreciation for unit holders.
So far this year, the frontier fund has returned 6.07%. Minimum investment in the fund is NGN10,000
#11. Vantage Guaranteed Income Fund
This is another product from Investment One Financial Services Ltd. The Vantage Guaranteed Income Fund invest in a diversified portfolio of money market instruments and carefully selected equities. It is aimed to provide guaranteed income to unit holders as well as preserve investors capital.
Minimum investment in the fund is NGN50,000
#12. United Capital Money Market Fund
So far this year, United Capital Money Market Fund has returned 4.31% to unit holders, placing it amongst the best performing mutual funds so far.
It is a unit trust scheme that aims to provide competitive returns to unit holders. This is in addition to preservation of capital, diversification and liquidity.
The fund is a product of United Capital Plc, one of the leading investment companies in Nigeria.
Final Words
Mutual fund investment is, perhaps the easiest way to start investing if you are novice. And in Nigeria, there are so many funds to choose from. Begin with studying the list above.
However, this list is not a rating nor an endorsement of any of the funds in Nigeria. It is strictly opinion based on information available on public domain. In producing this list we review the price list of listed mutual funds as at the time of researching for this post.
Rate of return may not be only factor that drive your decision to invest. Historical performance and credibility of the fund manager also count. Thus, funds that are not listed here may turn out to be the best performing mutual funds when analyzed using other parameters.
Another important thing to note is that there are different types of mutual funds. Each type focusses on different asset class or a mixture of asset classes. Some are deliberately structured to appeal ethical preferences. Thus, while Equity funds invest in equities, money market mutual funds invest in money market instruments, and so on.
Always do your due diligence before taking any investment decision.
Kobotalk
Kobotalk is an information website dedicated to providing intelligence and analytics to aspiring entrepreneurs, business people, and individuals interested in investing and making money to ensure their financial freedom
