• Tuesday, March 05, 2024
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BusinessDay

Asset managers favour money market mix in N11bn Balanced Funds

Asset-Managers

Nigerian fund managers shifted focus away from equities in favour of money market instruments in their allocation of over N11billion in Balanced Funds assets, BusinessDay checks have shown.

Balanced Fund is a class of Collective Investment Scheme (CIS) which combines a stock component, a bond component and, sometimes, a money market component, in a single portfolio. The hybrid fund sticks to a relatively fixed mix of stocks and bonds that reflects either a moderate or conservative orientation. 

Analysis of the fund managers’ monthly investment schedule breakdown for June 2015 showed that the recorded bearish nature of the market, along with the not too impressive outings of most quoted companies on the nation’s Stock Exchange in the second half results, may dampen investors confidence in the instruments and consequently provide a haven for the investors in the money market instruments.

The analysts said last night, that contrary to the natural rule of a balanced fund providing investors with a mixture of safety, income and modest capital appreciation, the current negative returns in excess of minus 9 percent returns from the equities. This is making them jittery in their investment in equities, with the attendant preference for mutual funds causing its asset value to rise to N207billion, an increase of N1billion from the preceding week N206 billion.

Some of the Balanced Funds currently under the regulation of the Securities and Exchange Commission (SEC) are Women Investment Fund, UBA Balanced Fund, Union Trustees Mixed Fund, FBN Heritage Fund, Nigeria Global Investment Fund, Stanbic IBTC Balanced Fund, Indo Nigeria Unit Trust Fund, DV Balanced Fund, Nigeria International Growth Fund, and Nigeria Energy Sector Fund.

Asset-Managers

BusinessDay checks on fund managers monthly investment schedule breakdown for June 2015 at the Securities and Exchange Commission revealed that 20.66% of Nigeria Energy Sector Fund was placed in equities, while 78.75% of the balanced fund assets were placed in money market instruments by its fund manager –Sterling Capital Market Limited.

Further checks shows that 64.43% of Indo Nigeria Unit Trust Fund was placed in money market instruments, while 34.69% was in equities and none in fixed income instruments. The fund manager of this balanced fund is Sterling Capital Market Limited.

Also, 16.56% of United Capital Balanced Fund was placed in equities, 18.15% in fixed income instruments, while 65.27% of the same fund was placed in money market instruments. United Capital Asset Management Limited is the fund managers to this fund.

In addition, 46.63% of  the Women Investment Fund was placed in equities, 7.11% in fixed income instruments, and 35.40% of the fund’s asset was placed in money market instruments. The Women Investment Fund is managed by Chapel Hill Denham Management Limited.

CDL Asset Management Limited, the fund managers to Union Trustees Mixed Fund placed 45.33% of the fund in equities, 16.26% in fixed income instruments, while 31.90% was invested in money market instruments.

Notable money market instruments consist of negotiable certificates of deposit (CDs), bankers’ acceptances, Treasury Bills, Commercial Papers, and repurchase agreements (repos).

Chapel Hill Denham Management Limited, fund managers to Nigeria Global Investment Fund invested 62.20% of the balanced fund asset in equities, 2.93% in fixed income, and 21.60% money market.

Stanbic IBTC Asset Management Limited, the fund managers to Stanbic IBTC Balanced Fund, placed 39.84% of the balanced fund in equities, 2.90% in fixed income instruments, and 56.82% in money market securities.

A balanced fund is geared toward investors who are looking for a mixture of safety, income and modest capital appreciation.

FBN Capital Asset Management Limited, the fund managers to FBN Heritage Fund invested 31.54% of the balanced fund assets in equities, 26.24% in fixed income instruments, and 42.01% of the asset in money market.

In addition, 35.21% of DV Balanced Fund asset was placed in equities, 20.89% in fixed income instruments, while 43.02% of the balanced fund asset was placed in money market by its fund manager –Vetiva Fund Managers.

Analysts at Lagos-based Financial Derivatives Company Limited had noted that as the market remained bearish, investors sought shelter in alternative asset classes.

Currently, at the Nigerian equities market, unimpressive second quarter (Q2) and half-year (H2) results have further helped dampen investor confidence at Customs Street.

As returns from Nigerian equities routed further negative in excess of minus 9 percent, many investors who became jittery sought for haven in mutual funds, causing its asset value rise to N207billion, an increase of N1billion from the preceding week N206billion.

Iheanyi Nwachukwu