The Nigerian Exchange Traded Product (ETP) or Exchange Traded Fund (ETF) market capitalisation grew to N20.32 billion in the first three months of the year 2021.
Meanwhile, the market has witnessed a sterling performance since the rise of the pandemic in early 2020.
The data released on the Nigerian Exchange (NGX) Limited, showed that trade volumes rose by 3,064 per cent from nearly 0.2 million units in Q1 2020 to 5.3 million units in Q1 2021. Similarly, market turnover (value traded) skyrocketed by a mammoth 4,556 per cent between Q1 2020 and Q1, 2021.
Investor sentiments have been positive on alternative instruments like (fungible) ETPs offering the opportunity to hedge portfolios and enter/exit the market.
Also, the first quarter of 2021 has seen a continuation of the strong inflows witnessed at the end of 2020 throughout the Global ETF industry. Total flows in the ETF industry surpassed $100 billion in each month with new assets peaking at $130 billion in February thus, bringing the quarterly total up to $349 billion.
The NGX in its report stated that, “blockchain ETFs have benefitted from the incredible surge in bitcoin.
The Amplify Transformational Data Sharing ETF (BLOK), one of the market’s most popular and liquid Blockchain ETFs, is up 46.3 per cent in its price per share in Q1, 2021.
“Cannabis ETFs & stocks are soaring this year possibly due to the favorable policy outlook and improvement in industry fundamentals. Investor sentiments have been positive on ESG-themed ETFs and exchange traded products (ETPs) with global inflows of $55.8 billion in the first three months of the year.”
On the listed securities, NewGold ETF topped the activities by 3.473 million units valued at N29.629 billion. Vetiva Griffin 30 followed with 814,372 units valued at N13.943 million, while Lotus Halal Equity ETF traded 746,400 units worth N9.950 million.
Also, Meristem Value ETF pulled a transaction volume of 163,090 units at N2.900 million, while Vetiva Banking ETF transacted 56,116 units worth N232,397.70.
Meanwhile, ten brokers drove 99.8 per cent of total transaction value and 96.6 per cent of total volumes of ETFs traded in Q1, 2021
The NGX recently disclosed that it remains committed to the development of the market as it seeks to increase the number of ETFs listed on the Exchange.
At a workshop on NGX last year, head, asset management, Meristem Wealth Management, Taiwo Yusuf, noted that, ETFs are inherently designed to give investors access to a wide range of viable assets.
He stated that, “by investing in ETFs, investors are free from the rigors that come with trading in equities including stock valuation, screening, selection, and liquidity risk. This makes ETFs a more cost-effective investment solution. In addition, ETFs serve as a bespoke product for investors who want to add a tinge of innovation to their investment portfolios.”