Opening up investments in mutual fund for masses
Nigerian wealthtech firm, Cowrywise, has launched the first retail mutual funds’ platform that enables anyone to invest in top companies and high-quality fixed-income instruments with as low as N100.
Globally, mutual funds are designed to help the average person access high-end investment products, but in Nigeria, though, with about 70 per cent of Nigerians surviving daily on under $2 and the least purchase cost of mutual funds sitting between N5,000 to N10,000, they have not been actually inclusive.
Riding on the back of this, the platform hopes to change the present narratives and build a credible pipeline for mass participation in the Nigerian capital market. Its target is to ensure that over 10 million Nigerians are provided access to building wealth through legitimate and professionally managed investment vehicles by 2025.
Currently, the Nigerian mutual funds’ industry gets participation from less than 400,000 Nigerians and worths just about 2 billion dollars - equivalent to the value of assets under management of Wealthsimple, a Canadian startup. Another set of narratives Cowrywise hopes to change through improved participation.
To improve participation, the platform will focus on tackling the following issues-cost of entry; manual investment processes; limited transparency; complex money language; and poor risk assessment.
On tackling accessibility, Cowrywise, through strategic partnerships with top investment houses, will enable Nigerians to have access to multiple mutual funds directly from its app for as low as N100.
The first set of mutual funds are from top investment houses like Afrinvest Asset Management Limited (AAML) and Meristem Wealth Management Limited. Cowrywise is opening up its platform to more fund managers in Nigeria as a distribution platform to reach out to millions of Nigerians.
In addition, the platform boasts of a Systematic Investment Plan and a tailored risk assessment algorithm. The Systematic Investment Plan allows subscribers to automate investments into mutual funds of fixed amounts over a period of time as a strategy for beating the downsides of investing.
Complementing this, the risk assessment algorithm will help with suitable recommendations for mutual fund investments which suit the risk profile of the user.
Based on the results from the test, users will be given suggestions on the best fit funds and allowed to properly compare before making a choice of investment in order to eliminate the chances of blind or isolated choices.
Cowrywise is a fintech company democratising access to wealth management services. In just under 2 years, the Y Combinator-backed startup has established itself as a strong player in the quest for financial inclusion in Nigeria.
The journey started with automated savings and micro-investments in government bonds/treasury bills with as low as NGN100 and a trustee alliance with one of Nigeria’s top-tier trustees, Meristem Trustees Limited, to operate with the same security structure as pension funds. For more information, please visit cowrywise.com