Nigerian mutual funds attracted estimated net inflow of N4.6 billion in the month of April 2015 according to data released by the Security and Exchange Commission and analyzed by the analysts at Quantitative Financial Analytics Company Ltd. This is the second largest monthly net inflow as investors poured an estimated net inflow of N9.9 billion in January. Of the N5.67 billion net inflow in April, Money Market Funds attracted 84% or N4.7 billion. With so much money poured into money market funds in a single month, the estimated total net flow to that fund category in 2015 now stands at N14.3 billion while its asset under management is N71.6 billion or 37% of the total asset under management of all mutual funds in Nigeria.
Love For Money Market Funds
This trend indicates that investors are still very much risk averse because of the near collapse of the stock market in 2008/2009 coupled with the increased uncertainty in the market due to the fragile nature of the oil market and the local currency. The flocking of investors to money market products can also be attributed to the high and increasing yield in the market due to illiquidity in the financial system. As quoted in the various websites of money market fund managers, all the money market funds are yielding about 13% on average. In a situation where fixed deposits in banks pay much less, who will blame anyone for falling in love with money market funds.
Fund level flow analysis indicates that much of the money market inflow went to Stanbic IBTC Money Market Fund and FBN Money Market Fund, arguably the two money market funds with the highest yields. While Stanbic IBTC Money Market fund received about N2.15 billion for the month of April, FBN Money Market Fund got N2.146 billion. For the FY 2015 through April 30th, both funds had received an estimated combined net flow of N12.556 billion, with Stanbic IBTC Money Market Fund receiving the greater amount of N9.08 billion while FBN received N3.47 billion. ARM Money Market Fund which did not attract much this month, received about N1.5 billion for the year.
All said and done, there is an indication that investors appetite for mutual funds in Nigeria is alive and well as the mutual fund universe has seen about N29.7 billion inflows and N12.48 billion out flows for the year leaving it with a net inflow of N17.21 billion. This trend of events has brought the total asset Under Management of Nigerian Mutual Funds to N193.5 billion as at April 30th 2015. With that size of AUM, the mutual fund industry has grown by 10.05% over its 2014 yearend balance of N175.86 billion.
Fund Category Growth
Growth analysis by fund category casts more insight into the risk appetite of Nigerian Mutual Fund investors. Equity based funds which ended FY 2014 with a NAV of N34.7 billion grew by 3.48% to a new NAV of N36 billion. Real Estate Investment Trust Fund, REITs grew by 1.11% from N46.9 billion from N46.4 billion while Balanced Based Fund Category garnered 2.87% increase from its 2014 yearend balance of N8.48 billion to become valued at N8.72 billion. The Sector Fund category which has Energy sector fund as the only fund in that category increased by 3.53% to end April 2015 with
NAV of N975.27 million having ended prior year at a NAV of N942.06 million. The greatest growth in Asset Value came from the Exchange Traded Fund Category which ended 2014 with a value of N2.64 billion only to balloon to a valuation of N4.62 billion by April 2015. This74.77% increase in Asset value in this category was largely due to the listing of two new Exchange Traded Funds, Lotus Halal ETF and Stanbic IBTC 30 ETF. and due to good performance. Money Market funds also witnessed large increase in AUM as it went from ending 2014 with a value of N57.3 billion to becoming N71.6 billion by the end of April 2015. With this 24.9% increase, the Money Market category of Funds consolidates its position as the largest category. That category now has 37% share of all mutual funds by Asset Value.
The Flip side
On the flip side, Bond Based Fund category witnessed a decrease in Asset Value of -0.81% going from 17.32 billion to N17.18 billion while Ethical Fund Category followed the same trend as it lost 8.61% of its 2014 asset value of N5.23 billion to become N4.78 billion. This loss was not as a result of poor performance rather as a result of capital outflows that far exceeded the inflows generated by the categories within the period under review.