09-07-2015 by 
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For the first time in a long time, Nigerian Mutual funds seem to have disappointed their investors in the month of June.  Judging by the QTD (quarter to date) performance by the end of May, one would have thought that majority of the mutual funds were poised to deliver a mouth watering performance  by June quarter end. However, looking at June performance, it is apparent that it did not happen as planned. 

June Performance

Out of the 56 mutual funds, only 18 or 32% ended the month of June in the black all of which returned less than 2%. Of the 18, 7 made  returns in excess of 1% while the other 9 came back with miserable returns of less than 1%.  The remaining funds made losses of various magnitude with the largest being a negative 5.23% loss by Frontier Fund.  When compared with the Allshare index, however, the story is not as sorry as it looks.  While the Allshare index returned negative 3.09%, the NSE 30 index made negative 3.07% . It therefore means that although most mutual funds made losses, their loss is much less than what the market index lost. This could be due to the diversification advantages inherent in mutual fund investment.

Year To Date Performance

The story is more encouraging when viewed on a year to date (YTD) basis.  Of the 56 funds, only 7 recorded negative YTD performance. In a period where most funds blessed their investors with lower single digit YTD return, ACAP Canary Growth Fund put a smile on the faces of investors to the tune of 18% on a YTD basis.  Unfortunately, if the volatility and downward trend of the market that characterized a greater part of June continues, it looks like the single digit YTD returns will be erased before the end of the year. Click here to see it all.

Funds to Watch

Though the picture is not as rosy  as investors had planned or expected, there are still a few funds that one can take solace in.

Stanbic Absolute Fund:  This fund which has 98.86% of its assets invested in fixed income securities  and 1.14% in cash according to the May edition of Monthly Investment Schedule released by the Security and Exchange Commission, SEC, has only made a loss once in the last 30 months. It made 10.01% in 2013, 12,61% in 2014 and has so far made 6.57% in 2015.

Coral Income Fund: Another fund that is worth a look is Coral Income Fund, a fund that allocates 86.29% of its asset to money market instruments, and 13.71% to fixed income securities.  It has made a loss in two of the last 30 months, returning 8.93% in 2013, 7.33% in 2014 and 6.35% so far in 2015.

Nigeria International Debt Fund: is another fund that has stood its own even as the market ebbs and flows.  With 71.6% allocated to Fixed income securities, 27.31% to money market instruments and 1.09% to cash, the fund returned  10.93% in 2013, 7.89% in 2014 and 5.33% by the end of June 2015 having made negative returns in 4 of the last 30 months.

Be Warned: While there are other funds with stellar performance like the three above, please be warned that past performance is not a pointer to or guarantee for future performance and that the author is not recommending those funds. Please consult your financial adviser before you invest and invest according to your risk tolerance and appetite.

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