Are Nigerian Mutual Funds being affected by the Bear Market?


Monday August 25, 2014/Uche Ndimele, Funds & Valuation Expert

The Nigerian market has been more bearish than bullish in recent times resulting in sell offs. One is apt to ask to what extent the perception in the market reflects on the mutual funds. One way to gauge this is by looking at the flow trend in the mutual funds. Nigerian mutual fund investors were net sellers in the week that ended on August first 2014.  An analysis of data released by the SEC shows that in total, about N879.04 million worth of funds while injecting about N406.43 million, thereby leaving a net sale of about N399 million. Our analysis reveals that money market funds witnessed much of the withdrawals as well as the contributions. While about N490 million was withdrawn from money market funds, about N215.6 million was injected. On a net basis however, bond funds suffered the most as about N307.758 million was withdrawn against a contribution of about N41.09 million. The best in terms of flow activity is Real Estate funds which did not suffer any withdrawal but rather had about N43.45 million injections.



A deeper analysis also shows that among Equity funds, Stanbic Nigeria Equity, Coral Growth fund, Nubian Fund, ACAP, Nigeria International Growth Fund, Afrinvest and Anchor funds all saw various amounts leaving the funds but the greatest outflow came from Stanbic Nigeria Equity. On the other hand, ARM Discovery, Arm Aggressive, IMB Energy, Paramount, Bedrock, and Frontier funds witnessed inflows of various amounts. The most inflows went to IMB Energy fund which attracted investors to the tune of N17.186 million. At the end of the day, however, almost all the equity funds ended up in the red with regards to performance (gains/losses), except Nigeria International Growth fund, Paramount and Anchor funds which recorded gains of N79.33 Million, N179k and N880K respectively.


Like Equity funds, Bond funds recorded more capital outflow than inflow. A total of N307.758 million flew out while N41.093 million flew in. Among the funds that attracted inflows are Kakawa income guaranteed fund which was blessed with N33.876 million while FBN Income fund and INTC Guaranteed income fund saw N6.26 million and N0.9 million injections. Nigerian International Debt fund saw redemption of about N276 million while Zenith Income fund also saw N21.786 million flew out of the fund. Unlike Equity funds however, most of the Bond funds recorded impressive performance as all but UBA Bond Fund and Nigeria International Debt fund made gains.

The story is not different for money market funds which like the Equity and Bond funds also recorded more withdrawals than subscriptions.  The only difference is that all the withdrawal of N490 million witnessed by money market funds came from FBN Money Market fund while Stanbic money market attracted additional investment of about N171.2 million and ARM money market got N44.386 million in new subscriptions.

Real Estate funds seem to have broken the jinx that had plagued the other funds as it did not record any capital outflow but inflow of about N43 million thanks to N42.105 million that came into Union Homes Reits. Sky Shelter also recorded a marginal inflow of N1.345 million. In addition, all three funds under the Real Estate fund structure recorded positive gains.

Within the Balanced Fund category which also saw more redemptions than subscriptions, FBN Heritage and Union Trustees Mixed Funds recorded outflows in the amounts of about N3.381 million and N4.036 million respectively while the rest welcomed contributions of various amounts majority of which went to Indo Nigeria Unit Trust fund. In terms of performance, however, only Union Trustees Mixed fund ended the week in the black.

Like Real Estate funds, the Ethical Funds category attracted more inflows than out flows. While a total of N11.9 million left the category, additional N61.188m was injected.  Much of the injection went to Lotus Halal fund which garnered N45.54 Million while another N13.97 million went to Stanbic IBTC Imam Fund. The N11.9 million outflow suffered by the category went from Stanbic Ethical Fund which leaves one to wonder if the inflow to Imam fund was a switch from Stanbic Ethical.

The story is about the same for the Sector fund and ETF category in that both were spared the agony of any outflows but rather blessed with the joy of inflows.  The Nigeria Energy Sector fund which is the only fund in the Sector fund category, had about N8.255 million injected into it, while the Vertiva Griffin 30 Fund saw N5.15 million inflows.  The Umbrella Fund category was had hit withN13.89 million outflows and only N199K inflow with almost all the outflow flowing out of Stanbic IBTC Aggressive fund. Of all those, however, only IBTC Absolute fund recorded a gain.

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