Friday, May 14, 2021 / 12:54 PM / Coronation Asset
Management / Header Image Credit: Coronation Asset Management
The Mutual Fund Industry made a progressive impact on the economy in 2020, garnering a total asset of N1.6 Trillion, a 50% increment from the previous year.
The growth recorded is only 14 percent of the size of the much larger Pension Fund Industry. It is, therefore, very expedient to keep growing the Mutual Funds Industry, to make it become a financial force.
Head, Research, Coronation Asset Management Mutual Funds, Guy Czartoryski gave the figure on Monday, informing that last year was a good year for mutual funds despite the outbreak of the Covid-19 pandemic.
Speaking at a virtual media Briefing on Coronation Asset Management Mutual Funds Report, titled; Comparing Mutual Funds: Apples and Oranges; Why Harmonised Reporting Is the Next Step Forward", Czartoryski said " Last year market interest rates fell precipitously, with the yield on a one-year Nigerian Treasury Bill (NTB) falling from 5.40% in January 2020 to 0.15% in early December 2020. It was difficult for investors to get good rates of interest from their bank deposits.
According to him, initially investors turned to Money Market funds, which are the biggest segment of the Mutual Fund industry. Later, Czartoryski noted that they turned to Fixed Income funds because some of these were reporting good Unit Price gains during the year as interest rates fell and bond prices rose.
"This attracted a lot of money into the Mutual Fund industry and its total assets under management rose by 50% to N1.6 trillion. In general, there is a long-term move from bank deposits to Mutual Funds because Mutual Funds deliver all their gains, less a small fee, to their investors, and investors are beginning to appreciate that", Czartoryski.
Explaining further, Czartoryski said that they went through the experience of an ordinary investor looking to buy units in a Fixed Income Fund, adding "We compared the reported Unit Price (UP) performance of 17 different Fixed Income Funds during 2020, even though past performance is not necessary a guide to future performance".
Reeling out the results of their founding, the research expert said "What we found was that Unit Price data, which is supplied by the fund themselves is not comparable. Differences in reported performance are too large to be explained by differences in underlying performance in 2020. 2020 was a very good year for FGN bond prices.
He, however, warned that Nigeria needs to adopt Global Investment Performance Standards (GIPS), stressing that Mark -to - market accountancy is one of the cornerstones of GIPS.
"GIPS opens the way to the future. The first step is to harmonise reporting among Nigeria Mutual Funds", Czartoryski said.
In his welcome address, Managing Director Coronation Asset Management Mutual Funds, Aigbovbioise Aig-Imoukhuede affirmed that there is financial growth in the Mutual Funds Industry.
Declaring that the industry grew with 50 percent, despite covid-19, Aigbovbioise insisted that Nigeria needs a standard form of reporting.