Tuesday, September 29, 2020 / 07:10 PM / ByCoronation Research / Header Image Credit: Coronation Research

.....The Shifting Appetite of the Nigerian Investor: From Savings toMutual Funds

MutualFunds are growing rapidly and are quickly becoming the default destination for Nigerians' savings. Just as the Pension Funds began to take off a decade ago, now MutualFunds are growing fast. The total value of Money Market funds rose 11% andFixed Income funds rose by 59% in the first half of this year. Mutual Funds areset to become a large part of the savings industry. In a few years they mayrival Nigeria's Pension Funds in size.

Inits new report 'The Shifting Appetite of the Nigerian Investor: From Savings toMutual Funds' the renowned Coronation Research explains the conditions behindthis growth. The total Assets Under Management (AUM) of Nigeria's Mutual Funds(also known as Collective Investments Schemes) rose by 305% in the periodbetween 2015 and 2019, more than doubling in inflation-adjusted terms. Ascommercial banks progressively offered lower rates on Savings Accounts, moremoney switches to Mutual Funds. And the introduction of tech-based savingsplatforms introduces a new generation of young savers to Mutual Funds.

"TheMutual Fund industry in Nigeria faces two challenges," says Guy Czartoryski,Head of Research at Coronation Asset Management, "the first is risk management.The era of high returns from Nigerian Treasury Bills ended in 2019. Today,investors need to invest in a variety of other asset classes in order to obtaina reasonable return, without becoming totally exposed to any one asset class.That means that investment management is more complex and more necessary thanbefore. Second, there needs to be more information on fund performance in orderto facilitate fund selection by investors and professional advisers.

Fortunately,the industry and its regulator are moving in this direction, preparing theground for a hugely expanded Mutual Fund industry in future, and creating theconditions for a significant capital base for the nation."

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• Full PDF Report

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