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In fact, Nigeria’s best-performing mutual funds in 2024 delivered up to 24% returns on investment for that year. In other words, if you had ₦1 million invested in Mutual funds at the start of 2024, you would have closed out the year with an additional ₦240,000 in interest payments. What are the best mutual funds in Nigeria at the moment? That’s a question this article will answer. But first, let’s explain what mutual funds are.
What are Mutual Funds?
A mutual fund is money that’s pooled together from several investors and invested in a variety of assets by professional fund managers who oversee the investments. Assets in a mutual fund may include stocks, bonds, REITs, and even commodities. The returns or losses that accrue from a mutual fund depend on the performance of the component assets. For example, given current market conditions, if a fund has 80% of its holdings in government bonds and 20% in stocks, it’ll do better than one that has an equal stake in bonds and stocks.Mutual Fund Types
Mutual funds can be classified based on the assets they hold. Some of them are:- Equity funds, which invest in stocks
- Money market funds, comprising debt instruments like treasury bills, certificates of deposit, and commercial papers
- Fixed income funds, consisting of government and corporate bonds that pay a fixed rate of return
Why You Should Consider Investing in Mutual Funds
Here are a number of reasons why investing in Nigerian mutual funds might be a good idea:- Many of them are reasonably diversified, so they aren’t overly exposed to a single asset
- They are managed by professionals, often on a day-to-day basis
- You can choose between various types of mutual funds that represent differing levels of risk
- They are a great way to conveniently invest in the assets which the funds are composed of
What are the Best Nigerian Mutual Funds to Invest in Right Now?
What follows is our list of the best Nigerian mutual funds you can invest in today.ARM Money Market Fund
The ARM Money Market Fund is a low-risk fund managed by ARM Investment Managers. It’s designed to yield steady returns without any significant likelihood of losing your capital. It’s also liquid and suitable for short-term investments. At the time this article was written, the ARM Money Market Fund held Term Deposits and Treasury Bills at a 60% to 40% split. Expected annual returns from the fund stood at 21.99%. Interest is paid quarterly, so it can be a source of regularly generated income.Sign up for the Connect Nigeria daily newsletter
Stanbic IBTC Money Market Fund
This mutual fund primarily exists to maximise current interest rates. Its managers aim to provide a better deal to clients than they’d get with a traditional bank account. They’ve managed to do that over time, with annual returns crossing 10% in 2023 and 20% the following year. Stanbic IBTC Money Market Fund is split across Term Deposits (its greatest exposure), Treasury Bills, Commercial Papers, and Cash and its Equivalents. Annual returns at the moment hover around 21%. Interest is paid quarterly.Coral Money Market Fund
The Coral Money Market Fund is overseen by FSDH Asset Management. The approach taken by the fund’s managers all but guarantees the preservation of investors’ capital while seeking decent returns. As a result, it’s considered low risk and a good deal for people with limited risk tolerance. Most of this fund (about 85% at this time) is tied to various treasury bills, which may have differing tenors. The rest is allocated to other money market debt instruments. Currently, annual returns sit at 21.05%. You can access returns every quarter.TrustBanc Money Market Fund
This fund is run by TrustBanc Asset Management, a subsidiary of the TrustBanc Financial Group. It invests pooled money in liquid short-term money market instruments. As is the case with most low-risk mutual funds, its principal objective is to safeguard capital while also turning in competitive returns. As of the time this article was written, the annual return from this mutual fund was put at 21.99%. Its components are Term Deposits, Treasury Bills, Commercial Papers, and Cash. Investors receive their returns quarterly.Vetiva Money Market Fund
Vetiva Money Market Fund is open-ended; this means that investors can buy and sell it at any time, and at the prevailing market rate. They do not have a specific end date. This fund is managed by Vetiva Fund Managers. Another characteristic worth noting is that it’s quite diversified. The Vetiva Money Market Fund invests in Term Deposits, Cash, Treasury Bills, and fixed income. It presently has an annual return of about 20.34%. As is the case with the other funds on this list, this one delivers its returns quarterly.Register to attend the CN Business Mixer
Final Words
Nigerian mutual funds are a potentially profitable investment. But be sure to do your due diligence before buying into them. Returns aren’t set in stone, and past performance isn’t a guarantee of future returns. If you study the offerings available well enough, you could choose a mutual fund that does well in particular economic conditions.Got a suggestion? Contact us: editor@connectnigeria.com
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