Performance Review of Mutual Funds

Proshare

Friday, July 25, 2014 11.46 AM / Proshare Research

 

There are several classes of mutual funds that you can opt for in the market today, and indeed this is a bewildering choice. We have analyzed a few types of funds to give you a better sense of which funds might be reasonably expected to do better in the long run.

 

Some points to keep in mind while selecting a mutual fund such as, before investing in a mutual fund, investors should read the policy document and conditions of the fund carefully, and should conduct research on mutual fund manager ‘s performance track record, the fund house’s reputation, the past performance of the fund, corpus size of the fund, etc. The mutual fund manager’s investment skills can be best determined by measuring their performance through a full market cycle of 3 to 5 years.

 

One should also compare the performance of the mutual fund its peers & competitors, especially in the areas on returns, costs levied on the investors’ (fees), etc. One has to research the specific fund with a full understanding of the fees. The expenses of the mutual fund should be within the industry norm (the lower, the better).

 

Equity Funds:

These funds invest typically only in equities, and can be split into large cap, mid cap and small cap, among other classifications such as telecom, banking, infrastructure, etc. Some of the better performing funds are Zenith Equity Fund, BGL Nubian Fund, and UBA Equity Fund. These funds are among the top 3 performers in the equity mutual fund universe currently, based on returns. However, before investing in any of these funds it is advisable to check their expense ratios, fund manager pedigree, and type of companies that they invest in.

Net Asset Value (In Naira)





Note: Since the SEC has stopped updating the mutual fund information on a regular basis, July 11th is the last updated price information available

 

Bond funds:

Bond funds are those that invest in government or cooperate bonds, and take advantage of interest rate movements to benefit from the changing bond yields. These funds typically ensure capital protection, with limited capital gains – typically much lower capital gains than equity mutual funds. In our universe, the FBN Fixed Income Fund and the Zenith Income Fund are the top performing funds, with returns over the past few months being only a few percentage lower than that of equity funds.

 

Net Asset Value (In Naira)


Note: Since the SEC has stopped updating the mutual fund information on a regular basis, July 11th is the last updated price information available



Balanced based funds:

These funds mix the best of both worlds – with the returns from equity and the capital protection from debt, they invest judiciously in a mix of debt instruments and in the equity markets to ensure balanced growth. The Nigeria Global Investment Fund has shown the best returns over the past few months, while the Stanbic IBTC Balanced Fund has been the second best performer in this segment.  Given their strong track record, these funds are likely to outperform their peers in the coming months as well.

 

Net Asset Value (In Naira)



Note: Since the SEC has stopped updating the mutual fund information on a regular basis, July 11th is the last updated price information available



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