Tuesday, May 30, 2017 3:00pm / Quantitative Financial Analytics
IBTC money market fund— Nigeria’s largest fund by assets, with N102.2 billion in assets as at May 5th, 2017 saw N9.7 billion in outflows over the week ending May 12th -the largest weekly outflow in the fund since 2009. Prior to this period and event, the largest weekly outflow from the fund occurred on July 1st, 2016 in the amount of N3.6 billion and the last time the fund recorded an outflow was December 16th, 2016. This comes from analysis carried out by Quantitative Financial Analytics, Nigeria’s foremost mutual and pension funds analytics company. Though the fund suffered that much outflow, it is nothing compared to the estimated N37.1 billion worth of inflows that the fund has generated since January 1, 2017. With the sudden huge outflow, the Net Asset Value of the IBTC money market fund now stands at N93 billion, an 8.94% decrease from its N102 billion value the previous week. Since 2009, the IBTC money market fund had received an estimated inflow of N126.57 billion and outflow of N33.52 billion, leaving it with an AUM of N93 billion. The fund is currently yielding about 18.4% and charges management fee of 1.5%.
It was not apparent why the fund suffered such a huge, first of a kind, outflow but an email exchange with the fund manager indicates that the “dip in NAV was the result of a planned redemption by an institutional investor, who needed the money to meet financial obligations”.
The impact of the outflow did not change the dynamics of the Nigerian mutual fund industry as IBTC Money market fund remains the largest single fund by asset in Nigeria with IBTC Asset Management Company retaining its position as the largest fund manager by assets.
The IBTC Money market fund is aimed at investors interested in fixed term deposit placements or hybrid current accounts and looking to achieve higher returns from such investments. The fund therefore invests 100% of its assets in low risk money market securities with financial institutions in Nigeria rated “A” and above by a recognized local rating agency.
By investing in the fund, investors are offered access to a diversified portfolio of money market securities like Guaranteed Commercial Papers, Treasury Bills, Bankers’ Acceptance, Certificate of Deposit and other fixed income investments. The fund also offers an opportunity for parents/ Guardians to subscribe to units of the fund on behalf of and in the name of minors like all the other Stanbic IBTC Mutual Funds.
It does not cost an arm and a leg to invest in the fund because with a minimum investment amount of N5,000, one can invest in Nigeria’s largest mutual fund, the IBTC money market fund but you will be required to invest for a minimum of 30 days before making any withdrawals or you pay a penalty of 0.5% of redemption proceeds.
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