By OLUSHOLA BELLO, Lagos
Coronation Asset Management Limited has stressed the need for investors to take advantage of investment opportunities in the mutual fund market.
The head of Research, Coronation Asset Management, Mr Guy Czartoryski, stated this during a virtual media briefing to unveil the firm’s latest report titled: “Shifting the Appetite of Nigerian Investors: From Savings to Mutual Funds.”
According to the report, the Nigerian fund management industry currently offers levels of growth probably only exceeded in the tech sector.
Mutual Funds, it stressed, are growing rapidly and are quickly becoming the default destination for Nigerians’ savings. Just as the Pension Funds began to take off a decade ago, now Mutual Funds are growing fast. “The total value of Money Market funds rose 11 per cent and Fixed Income funds rose by 59 per cent in the first half of this year. Mutual Funds are set to become a large part of the savings industry. In a few years they may rival Nigeria’s Pension Funds in size,” the report emphasised.
He explained that the total Assets Under Management (AUM) of Nigeria’s Mutual Funds (also known as Collective Investments Schemes) rose by 305 per cent in the period between 2015 and 2019, more than doubling in inflation-adjusted terms. As commercial banks progressively offered lower rates on Savings Accounts, more money switches to Mutual Funds and the introduction of tech-based savings platforms introduces a new generation of young savers to Mutual Funds.
Czartoryski, however noted that the Mutual Fund industry in Nigeria faces two challenges, saying that the first is risk management. The era of high returns from Nigerian Treasury Bills ended in 2019.
“Today, investors need to invest in a variety of other asset classes in order to obtain a reasonable return, without becoming totally exposed to any one asset class. That means that investment management is more complex and more necessary than before.
“Second, there needs to be more information on fund performance in order to facilitate fund selection by investors and professional advisers. Fortunately, the industry and its regulator are moving in this direction, preparing the ground for a hugely expanded Mutual Fund industry in future, and creating the conditions for a significant capital base for the nation,” he said.
Coronation Fixed Income Fund consists of a diversified portfolio of high-quality fixed income securities that delivers consistent excess returns. The fund returned 20.90 per cent in 2019, making it the highest ranked fixed income fund by yield. In recognition of its commitment to product innovation and corporate governance, the firm was recently awarded the Fastest Growing Fund Management Company in Nigeria at the 2020 Global Banking and Finance Awards.