15-09-2015 by 
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This year has frequently seen politico-economic  events dominating investor mood both in Nigeria and globally . Starting with fall in crude oil prices, and the subsequent devaluation the Naira  to the delay by the Buhari led government to fashion out a fiscal policy for Nigeria coupled with lack of ministerial appointments. At the global level, the sudden devaluation of the Yuan by China and the Greek debt debacle, all put investors on edge. All those factors and more have connived against the markets leading to massive sale offs by and panics among investors.  Meanwhile, apprehensions has heightened among mutual fund investors following the suspension of BGL Asset managers and the attendant arrest and investigation by the authorities.

Regrettably but expectedly,  benchmarks have often hit new lows this year and  year-to-date gains have been erased almost irretrievably. The NSE Allshare Index and the NSE 30 Index are down  14.35% and 15.05% as at August 31 (so far this year). The Banking and Consumer Index are down 14.68%  and 19.07% respectively year to date (August 31)  while the Industrial Index seems to be the only Index holding its own by being up 2.73%.

The NSE Oil and Gas Index is down 7.64%, no thanks to the global oil market volatility, not even the Lotus Halal Islamic Index could put a smile on the faces of Sharia compliant investors as the Index has also gone down by 9.06% YTD by August 31.

Looking at mutual funds, the latest figures from the Security and Exchange Commission suggest that the nation’s mutual funds 'combined assets increased 19.3% on a YTD basis to N209.8  billion in August, from the N175.8 billion it opened the year with.  For mutual fund investors,  light could still be found at the end of the tunnel by looking for not only the best performing funds but also fund that are consistent in their performance.

For investors keen to find out the best performing funds so far this year, there 4 of funds that stand out based on the fact that those 4 have never lost money this year.

5 Best Performing Funds So Far in 2015

Here are the 4 funds that have caught our eyes as the best performing funds because of their performance consistency as well as the fact that they never made a loss this year.

Stanbic IBTC Absolute Fund : The Fund seeks to provide liquidity whilst maintaining low to medium volatility of return over the long term. This Fund  currently invests 96.56% of its assets in money market instruments and 3.44% in cash according to the latest monthly Fund Manager Investment Schedule released by the Security and Exchange Commission for the month of July, 2015, The fund  is aimed at investors with low risk appetite.


The fund has returned 8.86% year to date and boasts of a 1-year return of 13.31% and 6-month return of 6.8% according to analysis by Quantitative Financial Analytics.  The Stanbic IBTC Absolute Fund has not lost money this year. The last and only time the fund recorded a loss was in June 2013, (we started tracking this fund from 2013). The fund has  an expense ratio of 0.46% according to the expense ratio information released by the SEC.  The Stanbic IBTC Absolute fund is a low volatility fund with annualized  standard deviation of 1.7 and  high reward and low risk profile. According to analysis by Quantitative Financial Analytics, the fund has an inception to date risk of 0.61 and reward of 6.67.


UBA Money Market Fund : This Fund seeks to provide security of capital, liquidity and high competitive returns for its investors. It currently invests 99.91% of its assets in money market instruments and .09% in cash, according to the latest monthly Fund Manager Investment Schedule released by the Security and Exchange Commission for the month of July, 2015.

The fund has returned 8.07% year to date and boasts of 1-year return of 11.% and 6-month return of 6.43% based on analysis by Quantitative Financial Analytics.  The UBA Money Market Fund has not lost money this year.  The fund has  an expense ratio of 0.63% according to the expense ratio information released by the SEC.  Though the fund invests in money market instruments, its volatility seems high as it has  annualized  standard deviation of 13. According to  analysis by Quantitative Financial Analytics, the fund has an inception to date risk of 3.94 and reward of 6.77 which puts it in the medium risk quadrant of the risk profile chart.

 FBN Fixed Income Fund : The Fund seeks to preserve and maximize return on capital while maintaining a high degree of liquidity by investing in a diversified portfolio of long tenured debt securities and short-term, high quality money market securities issued in Nigeria. The Fund currently invests 50.08% of its assets in Fixed Income instruments and 49.53% in Money Market securities, and 0.39% in cash, according to the latest monthly Fund Manager Investment Schedule released by the Security and Exchange Commission for the month of July, 2015.


This fund has returned 8.33% year to date and boasts 1-year return of 4.98% and 6-month return of 6.66%.  The FBN Fixed Income Fund has not lost money this year.  The Fund pays dividend every year and the last dividend of N89.94 per share was paid in April 2015.

The  fund is a medium  volatility fund with annualized  standard deviation of 10.19  and low reward and low risk profile. According to analysis by Quantitative Financial Analytics, the fund has an inception to date risk of 1.32 and reward of 1.78.

Nig International Debt Fund : NIDF offers investors safety, capital preservation, steady returns, diversification and value.  The Fund  currently invests 77.48% of its assets in Fixed Income instruments, 17.83% in Money Market securities, and 4.68% in cash, according to the latest monthly Fund Manager Investment Schedule released by the Security and Exchange Commission for the month of July, 2015. The fund has returned 9.06% year to date and boasts 1-year return of 11.55% and 6-month return of 7.69%.  The Nig International Debt Fund has not lost money this year.  This Fund has a consistent  dividend history and the last dividend of N38.21 per share was paid in June 2015. The  fund is a low  volatility fund with annualized  standard deviation of 5.51  and low reward and low risk profile. Analysis by Quantitative Financial Analytics shows that the fund has an inception to date risk of 1.37 and reward of 3.77.

SFS Fixed Income Fund :

 This Fund  currently invests 18.54% of its assets in Fixed Income instruments and 80.53% in Money Market securities, and 0.93% in cash, according to the latest monthly Fund Manager Investment Schedule released by the Security and Exchange Commission for the month of July, 2015.  The fund has returned 7.37% year to date and boasts 1-year return of 15.47% and 6-month return of 5.42%.  The SFS Fixed Income Fund has not lost money this year and has not lost money since inception in 2014.  The  fund is a low  volatility fund with annualized  standard deviation of 3.18  and low reward and low risk profile. Analysts at Quantitative Financial Analytics have indicated that the fund has an inception to date risk of 1.75 and reward of 3.19.  

 Common Features

 One may be quick to ask what makes those funds tick and why and how do they weather the storms in the market. There are a few things common among those  funds. With the exception of UBA Money Market Fund, the rest of the funds are fixed income funds. In addition, much of their assets are invested in money market instruments. This shows that with volatility in equity markets, fixed income focused funds are better positioned to make gains. Another thing that analysts at Quantitative Financial uncovered is that all those  funds have low correlation with  the NSE Allshare Index. While Stanbic IBTC Absolute fund and UBA Money Market Fund have a negative 0.04 correlation with the NSE Allshare Index, SFS correlation coefficient is  -.20  while Nigeria International Debt Fund has a correlation coefficient of -.0 6 leaving FBN Fixed Income as the only fund, among the best 5 that has a positive correlation to the market with a correlation coefficient of .23. The implication of the negative correlation is that the performance of those funds moves in the opposite direction with that of the Allshare Index.  This finding possesses a potent guide and tool  to those seeking to diversify their portfolios and maximize their returns.

 

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