Mutual Funds Transactions Drop By 12.2%

Volume of transactions in mutual funds, otherwise known as Collective Investment Scheme, dropped by 12.2 percent in 2021 with investors’ commitment in the asset class falling to N1.3 trillion from N1.49 trillion in the previous year, 2020.

On a Year-to-Date basis, the investment in the asset class also fell by 12.8 percent from N1.49 trillion in January, 2021, reflecting increased investors’ apathy towards mutual funds.

Breakdown of performance in the different classes of the CIS showed that Bonds Funds outperformed the Equity-based Funds and the Money Market Funds. The Bonds Funds recorded the highest patronage with 12.6 percent Year-on-Year (Y/Y) growth in asset value to N534.14 billion from N474.30 billion a year ago.

Money Market Funds fell 25.1 percent to N536.39 billion from N743 billion, while Equity-based Funds declined by 7.2 percent to N28.34 billion from N30.54 billion in the previous year. 

Financial experts attributed the development to low rate of returns recorded in some of the Funds as well as lack of understanding of the benefits by retail investors.

Consequently, sector operators have called for more awareness campaigns on the part of the regulators and the fund managers in order to acquaint investors with the benefits while assuring them of safety and better regulatory environment.

They further emphasized the need for a downward review of the minimum entry fund in order to give opportunity for more retail investors to subscribe to the funds. 

According to them, the introduction of fee structure where the SEC announced annual supervisory fees of 0.2 per cent on the Net Asset Value (NAV) of the CIS would further weigh badly on the performance of the funds.

Kehinde Ogunyale

Reporting on the data-driven economy, and investigations.

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