Futureview Group in its corporate analysis of the current Nigerian investor psychology has identified inflationary pressure as a major risk to return on investment (RoI) across assets classes.
At the moment, many investors are apprehensive of the likely impacts of energy crises on the earnings of quoted companies at the end of the first quarter (Q1) this year. This has created another level of uncertainties in investment decision.
The analysis places premium on diversification of portfolio to maximize return on investment and minimize risk.
The statement by the Managing Director and Chief Executive Office, Futureview Securities, Ijeoma Amechi, advises Nigerian investors to focus more on the stocks of companies with strong fundamentals to minimize risks.
“One of the key challenges facing investors in the Nigerian Market is inflation. To earn Real Return on Investment (ROI), investors need to earn ROI that is higher than inflation which is currently at 15.7percent. This return can be achieved in the Stock Market because of the low interest rate regime in the Fixed Income space.
“Unfavourable macroeconomic factors as well as uncertainties surrounding pre-election year are also negatively influencing investors’ appetite for risky assets.
Investors should diversify their portfolios and have a mix of risk assets and fixed income assets. The risk assets will provide opportunity for high returns while the fixed income assets will provide buffer against unexpected negative returns from the Stock Market. It is also noteworthy that investment in mutual funds is a hedge against
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“Investors are advised to invest in stocks of companies with good fundamentals. They should contact stockbrokers for proper analysis of the companies’ financials. The securities professionals also conduct technical and fundamental analysis to identify underpriced stocks and determine their fair values as well as the right entry prices that will enhance their return based on the upside potential of the stocks.
“Most investors are either not savvy enough or don’t have sufficient time to conduct proper research analysis before investing. So they are advised to take advantage of the Mutual Funds managed by professionals that have both the expertise and the time to do proper analysis and make right investment decisions on behalf the investors.
“Mutual Funds provides required diversification, professional management, reduced transaction costs, opportunity for retail investors to invest in assets that require large capital outlays among other benefits,” said Amechi.
Futureview’s Group Managing Director, Elizabeth Ebi, had in an exclusive interview announced the regulatory approval of Futureview Equity Fund and Futureview Dollar Fund by the Securities and Exchange Commission (SEC).
Ebi stayed that the mutual funds were targeted at both indigenous investors and Nigerians in diaspora. According to her, mutual funds guarantee steady income and serves as a hedge against inflation.
“As part of our professional obligation to create products that meet the needs of diverse investors worldwide, we have floated the Futureview Equity Fund and Futureview Dollar Fund to address the challenges of negative return on investment in the challenging operating environment,” Ebi said.
The Managing Director, Futureview Assets Management, Ugochi Nnodi explained that many indigenous investors and Nigerians in Diaspora had made strong commitment to the mutual funds.
