ETFs remain KING as investors’ confidence frail towards stocks

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Monday, November 07, 2016 3.20 pm / Proshare Markets

It has been a tough trading year for the Nigerian stock market, so far, in the year 2016. Nigerian stocks are currently not in wining shapes as economic realities had dampened investors’ appetite towards investment in stocks significantly. The key benchmark index is trading below its starting point for the year by -6.10% as sentiments towards investment in equities remain negative.

The bearish posture of macroeconomic fundamentals continued to drive uncertainty in the stock market, depressing all equity-based investment portfolios across board- Mutual Funds portfolios are not excluded from these severe hits.

A cursory look into banking stocks revealed that investors are strongly sceptical towards investing in the sub-sector as data indicates. The sub-sector posted -20.77% average loss as at November 4th 2016, as strong bearish and low risk appetite postures are shown towards banking stocks at the moment.

This unimpressive outlook is not peculiar to the Nigerian stock market alone, it cuts across Key African and Regional stocks markets as analysis had shown JSE All Share Index down by 1.99%, Kenya ASI trading lower by 1.99% and Ghana (GSE) plunged by 14.20% based on year-to-day performance as at November 4th 2016.

Just as noted above, mutual funds market is not exempted as investors sold-down and redeemed accordingly as Net Assets Value maintains steady decline pattern, posting 9.91% loss between August and September 2016.

However, the money markets instruments had recorded modest patronage, taking clue from improved performance recorded by money market funds. The increase in interest rates had made fixed income and money markets more attractive in recent times as investors moved to preserve cash due to the unstable pattern in the equities market.

In a similar pattern, impressive patronage was observed towards Exchange Traded Funds (ETFs) as analysis revealed. The ETFs has recorded an average returns of 31.79% so far in the year. The performance was led by ETF New Gold, which posted +95.49% YTD returns, followed by Stanbic ETF 30 with +1.07% YTD returns, while Vetiva Griffin 30ETF posted negative YTD returns of -1.19%.

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