Can you tell us what is mutual fund?
Mutual fund is a pool on money collected from many investors to invest in securities like equity, fixed income, mixed securities among others. It provides investors with access to investment markets by pooling their money with the money of several other individuals with similar investment goals.
By diversifying investors’ investments, mutual funds assist with minimising the potential risks typically associated with investing. Mutual funds differ to stocks as they are not traded on an exchange and investors can buy and sell through a Fund manager at any time. Units are created and sold to new investors on a continuous basis, so investors can either invest a lump sum or save on a regular basis. Our mutual funds are regulated by the Securities and Exchange Commission (SEC) of Nigeria.
What are the opportunities in the mutual fund market?
On the opportunities, investors will be able to benefit from stocks which ordinarily he or she might not have resources to invest in. It increases dividend yield of investors. It is being managed by professionals who are under the watch of regulators. It is safer than just buying a stock. If the stock has problem all money is gone but this is not the same with Funds, it is putting many eggs in different baskets.
How can everyone invest in mutual funds?
Just like primary offer, if a new mutual fund comes out, investors can contact the issuing firm. But for secondary market for existing fund, one buy through their stockbroker with their CSCS account number.
What are the risks to investment in mutual funds?
All funds carry some level of risk. Investors may get a lower yield from the pool sometimes when compared with concentrating in a particular stock. This is where consultation with securities dealers commonly called stockbrokers becomes imperative for sound investment advice on processes and procedures for participation in unit trust schemes. They conduct research and do a lot of analysis to be on track with upcoming changes daily. With the current challenges in the global economy and negative return on investment in Nigeria, mutual funds present an alternative investment model towards sustainable positive return.
Looking at the investment environment, which of the funds are more profitable for investors to put their money?
Investing in equity or fixed mutual funds depend on economic environment. The Hybrid, blending equity and debt also go with economic conditions. Many of these funds are good. Contact your brokers for more details.
What is the minimum amount for investment in mutual fund?
Mutual Funds typically have an investment band depending on the nature of the fund. Some can be as low as a minimum of N5,000, whilst some can be N100,000 and others N1 million.