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   Market Date: 23-01-2015   
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3 Banks to Float N8bn Mutual Funds( Skye Bank, IBTC and FCMB)

Category: General

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3 Banks to Float N8bn Mutual Funds( Skye Bank, IBTC and FCMB)


Three banks, Skye Bank Plc, Stanbic IBTC Bank Plc and First City Monument Bank (FCMB) Plc will soon float mutual funds in continued efforts to mobilise more funds from the informal sector of the economy into the formal  sector.

THISDAY checks revealed last Friday that in all, the banks are planning to float separate funds worth a total of N8 billion.

Skye Bank is to float two funds, including Skye Islamic Fund and Skye Growth Income Fund. Each of the funds will offer 200 million units at N10 per share, amounting to N4 billion.
Similarly, Stanbic IBTC is to float two funds. They are Stanbic IBTC Bond Fund and Stanbic IBTC Money Market Fund. The bank will sell 10 million units of each of the funds at N100 per unit to raise N2 billion.

The last fund is Legacy Money Market Fund that is being sponsored by CSL Stockbrokers Limited (a subsidiary of FCMB). A total of 2,147,483,647 units of the fund will be issued at N1 per unit to raise over N2.147 billion.

It was gathered that the banks have already sent their applications to the Securities and Exchange Commission (SEC) for approval.
Although some of the organisations have existing mutual funds, market sources said the new ones may have been introduced to reach other investors who may not have been attracted to the existing funds.

For instance, Stanbic IBTC already has a Guaranteed Investment Fund, Nigerian Equity Fund and Ethical Fund. On the other hand, FCMB has the Legacy Fund.
Financial institutions floating mutual funds raised money from various investors and invest the funds in different securities. They use their expertise to manage the funds in order to deliver good returns to the investors.

Through mutual funds, investors enjoy diversification, professional management, liquidity, economic of scale and convenience.

SEC is making moves to boost mutual funds and other collective investment schemes in Nigerian. To this end, the Commission will be holding a meeting with Fund Managers and Trustees this Wednesday in Lagos. The meeting, it was gathered, will be an interactive forum for the exchange of ideas and to resolve grey areas that may have arisen in the course of their functions.

It is believed that collective investment schemes segment of the market offers opportunities to low net worth investors to buy into highly price equities through mutual funds also known as unit trust schemes.

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