Unit holders in the United Bank for Africa (UBA) mutual funds, managed by UBA Asset Management Limited, were last week rewarded with various distributions despite a harsh operating environment.
The funds, which include the UBA Money Market Fund, UBA Bond Fund, UBA Balanced Fund and the UBA Equity Fund, rewarded unit holder with 7.5 kobo, 5 kobo and 5.5 kobo respectively.
The fund manager, Mr. Haruna Jalo-Waziri, said the funds were able to reward its unit holders because its resources were effectively managed to ensure that stakeholders’ interests are taken care of.
He assured that the fund’s management will continue to do its best to give value to unit holders. He said the risk profile of investments in the equities market makes it important for investors in mutual funds to have a well diversified portfolio.
The fund manager noted that despite the situation in the capital market, its equity fund out-performed the Nigerian Stock Exchange (NSE) All-Share Index. He stated that the fund manager has mapped out strategies, which include making its equity fund active i.e. trading on it on a daily basis in the stock market.
Reacting to a call by unit holders for the Securities and Exchange Commission (SEC) to approve the appointment of audit committee for mutual funds, he stressed that the SEC is already doing the function of the audit committee.
According to him, “It will amount to double standard; SEC is already doing the function of the audit committee and we also have the trustees, so appointing audit committee will amount to over protection.”
While reviewing the money market industry, he noted that the sustained liquidity dearth in the sector was attributed to concerns over counter party risk, adding that spreads between over-night and tenured rates on inter-bank placements widened.
“Similarly, interest rates on time deposits of various maturities also rose. This was fuelled by the Central Bank of Nigeria (CBN) earlier decision to harmonise banks’ financial year end and aggressive deposit drive that ensued. Due to the surge in money, inflation remained in double digit territory in the second of 2008,” he said.
He added, “Due to the surge in money supply, inflation remained in double digit territory in the second half of 2008. The foreign exchange market witnessed relative stability until November 2008 when the Naira started to slide against the dollar due to falling external reserve”.
“The money market ended the first quarter of 2009 on a tight note with attendant increase in interest rate. The global economic and financial crisis contributed to the liquidity squeeze witnessed in the first quarter of 2009. Investors resorted to trading return for safety, thus leading to high subscription level on government securities in spite of the low yield,” he said.