Nigerians' growing interest in secure investments has driven the Net Asset Value (NAV) of Mutual Funds to N3.781 trillion in the first week of this month, representing an increase of 89.5% from N1.995 trillion during the same period in 2023. Analysts have linked this increase to several factors, including the consistent rise in the monetary policy rate and the devaluation of the naira.
According to data from the Securities and Exchange Commission (SEC), Fixed Income Funds played a crucial role in this growth, making up 47.76% of the total NAV. Money Market Funds followed closely, contributing N1.524 trillion, which accounted for 40.31% of the total NAV. Bond/Fixed Income Funds ranked third, with N212.5 billion, representing 5.62% of the total NAV.
In response to these developments, Victor Chiazor, Analyst and Head of Research and Investment at Fidelity Securities Limited, remarked that the upward trend reflects a strategic pivot by Nigerian investors aiming to protect themselves against rising inflation and currency fluctuations.
The influx into Mutual Funds is particularly significant as investors seek high-yield, low-risk options, favoring fixed-income, Money Market Funds, Bonds, and dollar-denominated assets. For example, the average yield on Fixed Income Funds year-to-date is 7.72%.
Additionally, Ambrose Omordion, Chief Operating Officer at InvestData Consulting, noted that the increasing preference for mutual funds amid market volatility highlights a broader strategy among Nigerian investors to pursue stability and enhanced returns in a challenging economic landscape.
Money Market Funds specifically invest in short-term debt instruments such as treasury bills, bank placements, and commercial papers, offering investors a low-risk avenue for short-term cash management and capital preservation.