FBNQuest, the investment banking, and asset management subsidiary of FBN Holdings, has recommended the FBN Specialized Dollar Fund (FSDF) to investors as a prudent move to diversify their portfolios from country-specific investment risks.
Rising inflation, negative real rates of returns, exchange rate volatility, and digitalization have increased the demand for global financial assets that provide an opportunity to diversify investors’ portfolios and earn potentially higher returns.
The FSDF serves as an investment vehicle that connects investors to these broader asset classes, according to a statement.
Ike Onyia, managing director of FBNQuest Asset Management, said: “Nigeria’s macroeconomic environment presents major challenges to institutional and individual investors.”
“Considering the upward trend of inflation and the volatility in the exchange rate, investors must explore opportunities to diversify into assets denominated in foreign currency,” Oniya said.
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“Moreover, some of these foreign assets offer very attractive returns. Investing in the FSDF gives investors a vehicle to stay on track to realize their investment objectives.”
The fund, an open-ended active fund, is designed to provide competitive returns to all classes of investors. It also offers an opportunity for local investors to reduce some of their country-specific risks while hedging against the potential devaluation of their local currency.
The fund will primarily invest in US dollar-denominated debt instruments issued within and outside Nigeria.
Instruments will include Eurobonds, US Treasuries, and other credible dollar-denominated money market assets.
As of Oct 12, 2022, FSDF was at a yield of 10.6 percent, and is ideal for investors with a medium risk tolerance threshold and an investment horizon of 3 to 5 years. With $10 thousand and multiples of $1 thousand, investors can gain exposure to the fund and the attractive returns its offers.
