Total net asset value (NAV) of mutual funds in Nigeria declined by N197 billion in the first six months of the current year, 2021, LEADERSHIP gathered.
Data obtained from the Securities and Exchange Commission (SEC) revealed that the total NAV of the 128 mutual funds declined from N1.479 trillion as of December 31, 2020 to N1.282 trillion as at June 30, 2021.
Mutual fund is a pool of funds brought together by a professional fund manager from several investors to invest in selected underlying securities.
The underlying securities can be one or a combination of the following: stocks, fixed income securities, real estate and commodities.
A mutual fund portfolio is structured and maintained to match different investment objectives. The type of mutual fund an individual invests in depends on their financial objectives and appetite for risk.
The industry saw 12 new funds being added to the NAV Summary Report, bringing the total funds on the report to 128. The analysis revealed that the performance of the fund market was in line with the performance of the Nigerian equities market as the NSE All Share Index, which tracks the general market movement of all listed equities shed 5.87 per cent as at June 30, 2021 and the market capitalisation lost N1.297 trillion for the period under review.
Although most of the categories of Mutual Funds in H1 appreciated except Mixed Funds, which declined by N1.009 billion, Money Market Fund was down by N250.26 billion in H1.
However, Bond Funds went up by N29.37 billion. Fixed Income Funds rose by N17.105 billion while Real Estate Funds gained N7.493 billion in H1. Equities Based Funds appreciated by N210 million, even as Ethical Funds rose by N126 million in the first six months of the year
This decline can be attributed to the negative real returns being experienced by those funds given the wide disparity between short-term yields and inflation, since the start of the year and perhaps a shift to some alternative and foreign currency-hedged products.