BusinessDay’s year-to-date analysis of the performance of 100 funds distributed over six broad portfolio classes shows FBN Capital Asset Management, First City Asset Management Ltd and Investment One Funds Management topped the gainers’ chart.
Using the monthly data from January 3 to August 7, 2020, the analysis of the funds registered with the Securities and Exchange Commission (SEC) evaluates the stock/fixed income selection skills of the fund managers.
While some mutual funds were seen performing well, others were moving in southward trajectory.
A fund manager in an era of high uncertainty in Nigeria’s investment environment amid COVID-19 and the low-yielding instrument could offer several advantages to investors.
Despite a record-inflation rate that has risen for 27 consecutive months to 12.82 percent in July, FBN Capital Asset Management, First City Asset Management Ltd and Investment One Funds Management topped the BusinessDay list of best performing mutual fund managers as they recorded some of the highest returns on investments.
AIICO Capital and PAC Asset Management Limited were also part of the top performers as they surmounted the odds to report a good performance in several portfolio classes.
For instance, out of the seven funds across all fund types (with a majority – 3 in bond funds), FBN Capital Asset Management recorded positive growth for all except for its money market fund which had zero growth like all other money market funds in H1 2020.
First City Asset Management Ltd had two positive growths in fixed income and bond markets, zero growth in the money market and negative growth in equity-based funds with bonds accounting for its largest increase in H1 2020.
With five funds listed on the Securities Exchange, Investment One Funds Management recorded positive growth in unit price for mixed funds (Vantage Balanced Fund), negative in equities market (Vantage Equity Income Fund) with no YTD change in its money market fund (Abacus Money Market Fund). Its two funds in the fixed income market (Vantage Guaranteed Income and Vantage Dollar Fund) had unchanged and positive growth, respectively.
According to Johnson Chukwu, MD of Cowry Assets Limited, any good fund manager should ordinarily have a good performance because a portfolio investor will first identify the instruments that qualify for investment in their portfolio.
“The selectiveness of investors in picking instruments into their portfolio is such that any good portfolio or fund manager should ordinarily outperform the market index,” Chukwu said.
While the year-to-date return on the Nigerian Stock Market (NSE) stood at -6.2 percent in August, FBN Nigeria Smart Beta Equity Fund which is managed by FBN Capital Asset Mgt recorded a return of 51.3 percent in the review period from a unit price of N129.9 on January 3, 2020 to N196.6 as at August. This represents the highest in equity funds as well as the top when compared to the performance recorded in the other six mutual fund instruments.
Meristem Wealth Management Ltd had the greatest decline of -22.8 percent among equity-based funds.
Analysis of SEC data for the review period shows that in the mixed funds category, AIICO Capital Ltd topped the gainers’ chart with a return of 20.5 percent from N2.5 to N3.02 within January and August 2020. On the other hand, Afrinvest Asset Management Ltd recorded the largest contraction of 17.8 percent from N152.58 at the beginning of 2020 to N125.4.
Under the bond funds, First City Asset Management Limited occupied the spot of the best performing manager. With 23.8 percent increase from N306.5 to N379.5, First City came first as Stanbic IBTC Asset Management Ltd had the least growth of 4.36 percent following the marginal increase in its unit price from N211.08 to N220.3 within H1 2020.
For real estate funds, FSDH Asset Management Ltd was the best performing asset with a 0.16 percent raise from N12.28 to N12.30-unit share price while the real estate investment trust fund of SFS Capital Nigeria Ltd had the greatest decline from N85.5 to N69.3, translating to a -18.95 percent drop.
Unlike all other categories of mutual fund, money market funds experienced no changes in its unit prices between January and August 2020. Nonetheless, it was the largest fund that was responsible for the performance of the entire mutual funds market although its contribution dropped from 73 percent to 61 percent between January and August 2020.
Further analysis of SEC data reveals that the asset managed by Nigeria’s mutual fund industry added about N300 billion year-to-date to reach a record-high of N1.32 trillion as at the trading week ended August 3 2020. Of the mutual fund categories, bond funds combined had the most contribution of 285.89 percent to the asset appreciation and was followed by the 62.76 percent added through fixed income funds.
Stanbic IBTC and FBN Capital Asset Management Limited made up the most of not just money market funds but the entire mutual funds with a Net Asset Value (NAV) of about N327.9 and N225.6 billion, respectively.
Meanwhile, the real estate and mixed funds had the lowest contribution to the whole mutual funds at 0.52 percent and 2.31 percent, respectively.
Equity-based funds contributed the least (less than 1 percent) to the entire mutual funds’ portfolio, from N10.91 billion in January, the equity fund increased marginally to N10.93 billion in August.