Best Mutual Funds in Nigeria – Top Performing Managers to Invest In Nigeria – Choose Equity-Based Fund, Money Market Funds or Fixed Income Funds for your Money in 2018, 2019, and 2020
I had earlier shared a guide on how a novice can start investing in the Nigeria stock market without getting involved in the day to day business and the best way to get started is via a regulated and registered mutual fund manager.
Mutual fund managers are considered professionals who understand and have been trained in stock market investing.
I also mentioned some of the mutual funds to consider based on their past performance in 2017. Please note that these mutual funds are equity-based managers who invest in stocks and as such come with a higher risk of exposure to the stock market volatility. Just like we saw these funds deliver up to 52% in 2017 as investors drove the market to a peak level, the risk of sell-offs had also dragged their net asset value to the south.
The overall NSE index is down by 16% with all the 10 equity-based mutual funds following the same path.
According to Financial Vanguard, FBN Nigeria Smart Beta Equity Fund, managed by FBN Capital Asset Management, a subsidiary of First Bank of Nigeria, Stanbic IBTC Aggressive Fund (Sub-Fund), managed by Stanbic IBTC Asset Management and United Capital Equity Fund, managed by United Capital Asset Management, led the negative trend with a decline of 44.5 percent, 36.4 percent and 23.5 percent respectively in their NAV.
Axa Mansard Equity Fund, managed by Axa Mansard Investments placed fourth, dropping by 22 per cent, while Stanbic IBTC Nigeria Equity Fund, also managed by Stanbic IBTC Asset Management and ARM Aggressive Growth Fund managed by Asset & Resource Mgt Company followed with 15.4 per cent and 12.1 per cent decline respectively.
Others are Frontier Fund managed by SCM Capital, Legacy Equity Fund managed by First City Asset Management and Paramount Equity Fund, managed by Chapel Hill Denham Mgt, which slipped by 4.9 per cent, 3.7 per cent and 2.3 per cent respectively.
Considering the huge risk involved in investing in equity-based mutual funds, it makes more sense for long-term investors to buy into mutual funds that had recorded consistent return in the midst of market volatility on at least 5-year horizon.
Although past performance isn’t a guarantee for future performance but to a larger extent, it helps to screen for managers that had survived various economic cycles and are considered top professionals in the investment space.
These are mutual fund managers for those that aren’t comfortable with equity risk but still want a slow and steady return above benchmark.
Stanbic IBTC Absolute Fund
This is the most consistent of all the mutual fund managers mentioned here, The fund invests in fixed income securities like Treasury Bills, Bonds, Commercial Papers, etc with an objective of providing liquidity.
Stanbic IBTC Absolute Fund has made a loss in 1 month out of 69 months ranging from January 2013 to October 2018. The average return of this fund since 2013 is 78.12% and on a breakdown, the managers generated 10.01%, 12.61% in 2014, 13.19% in 2015, 11.59% in 2016 and 18.48% in 2017. So far in 2018, the fund has gathered a YTD return of 12.33%. This means that the fund has generated a total of 78.12% return since 2013.
FSDH Coral Income Fund
The fund invests a maximum of 30% of its investible fund in the equities market while the balance is exposed to fixed income market and money market instruments. The objective of FSDH Coral Income Fund is to provide long-term capital appreciations while maintaining low to medium volatility.
The fund has lost 11 times out of 118 months and had generated 102.41% on average.
Zenith Income Fund
As the name implies, this fund is owned by Zenith Bank and had been delivering positive return since 2012. Although, the percentage return has been a single digit, inventors, looking for a balanced fund, are still well-off investing in Zenith Income Fund. The fund invests in Treasury Bills, and Bonds.
The fund has only made loss 15 times out of 82 months period.
That is all for now! If you look closely at the type of assets these funds are most exposed to, you will notice that the money and fixed income market makes more sense to low risk long-term investors.