Nigeria’s mutual funds industry assets increased to N1.6tr in 2020

The total assets under the management of Nigeria’s Mutual Fund Industry increased to N1.6 trillion last year.

In a report titled: “Comparing Apples and Oranges Why Harmonised Reporting Is the Next Step Forward,” Coronation Asset Management Mutual Funds said this was a 50 percent increase over the total assets garnered in the industry in 2019.

The Head of Research, Coronation Asset Management Mutual Funds, Guy Czartoryski, who authored the report, noted that despite the outbreak of the COVID-19 pandemic, 2020 was a good year for mutual funds.

He said: “Last year market interest rates fell precipitously, with the yield on a one-year Nigerian Treasury Bill (NTB) falling from 5.40 percent in January 2020 to 0.15 percent in early December 2020. It was difficult for investors to get good rates of interest from their bank deposits.

“Last year, investors turned to Money Market funds, which are the biggest segment of the Mutual Fund industry but later they turned to Fixed Income funds because some of these were reporting good unit price gains during the year as interest rates fell and bond prices rose.

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“This attracted a lot of money into the mutual fund industry and its total assets under management rose by 50% to N1.6 trillion. In general, there is a long-term move from bank deposits to Mutual Funds because Mutual Funds deliver all their gains, less a small fee, to their investors, and investors are beginning to appreciate that.

“During our research what we found was that Unit Price data, which is supplied by the fund themselves is not comparable. Differences in reported performance are too large to be explained by differences in underlying performance in 2020. 2020 was a very good year for FGN bond prices. ”

Czartoryski, however, warned that Nigeria needs to adopt Global Investment Performance Standards (GIPS), stressing that Mark -to – Market accountancy is one of the cornerstones of GIPS.

“GIPS opens the way to the future. The first step is to harmonise reporting among Nigeria Mutual Funds,” he counseled.

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