Special Focus On Most Credible And Value-Driven Asset Management Firms Promoting Wealth Creation In Nigeria
Asset management firms have become one-stop investment shops for individuals and organizations, which is not surprising given that they make well-timed investment decisions on behalf of their clients to grow their finances and portfolio through diverse investments. This provides them with access to higher-value options with better capital appreciation prospects, while also mitigating risks.
In recent years, there has been an increase in the participation of retail clients in the Nigerian Asset Management Industry, which was previously known to exclusively serve the high net-worth individuals (HNIs). This has resulted in an increase in the industry’s assets under management (AuM), which has grown at a CAGR of 29%, largely due to the exponential growth in the AuM of retail-focused collective investment schemes.
Investment in assets such as mutual funds, equities, bonds, and exchange-traded funds, among others, have become critical in generating alternate sources of income, emphasizing the critical role of asset management companies in wealth creation.
In this special report, The Guardian showcases three value-driven and credible asset management firms promoting wealth creation in Nigeria: Stanbic IBTC Asset Management Limited, Capitaltrust Investments & Asset Management Limited, and FBNQuest Asset Management Limited.
Stanbic IBTC Asset Management: Delivering High-Value, Low-Risk Investment Opportunities to Investors
Stanbic IBTC Asset Management Limited (SIAML) is a subsidiary of the Stanbic IBTC Holdings Plc and the leading non-pension asset manager in Nigeria. SIAML is committed to being the best wealth solutions provider in Nigeria and seeks to achieve this by ensuring the safety of funds, delivering competitive risk-adjusted returns, and providing consistent top-quality service through innovative and customer-focused people.
As a leading investment firm which has positioned itself as the ideal partner in the journey to wealth creation, SIAML demonstrates a deep knowledge and understanding of regulatory rules and principles undergirding its industry particularly the Investment and Securities Act 2007 which is enforced by the Securities and Exchange Commission and has established systems and processes in place to ensure compliance.
SIAML’s CEO, Oladele Sotubo speaks on the company’s engagement with the public to make informed investment decisions and how money market funds has increased savings culture among Nigerians.
Investing with Stanbic IBTC Asset Management
Stanbic IBTC Asset Management has various mutual funds under management that address the various risk profiles and objectives of our investors. These investments could be short, medium or long term in nature and the equity biased funds include: Stanbic IBTC Nigerian Equity Fund, Stanbic IBTC Ethical Fund, Stanbic IBTC Imaan Fund, and Stanbic IBTC Balanced Fund. The low-risk funds are Stanbic IBTC Money Market Fund; Nigeria’s largest money market mutual fund, Stanbic IBTC Bond Fund, Stanbic IBTC Enhanced Short-term Fixed Income Fund, Stanbic IBTC Guaranteed Investment Fund, Stanbic IBTC Shari’ah Fixed Income Fund, and Stanbic IBTC Dollar Fund. Our products are designed to meet clients’ needs of investing for the future in a way that is seamless and cost effective. With as little as N5,000 and $1,000 respectively, everyone can have access to our Naira and Dollar Mutual Funds managed by Stanbic IBTC Asset Management.
Strategy that sets SIAML apart
Our strategy is focused on safety of funds, risk adjusted returns and quality of service; these continue to be priority for our clients. In addition, we continually innovate and modify our approach to ensure clients always access new opportunities for competitive returns.
In 2021, we launched the Stanbic IBTC Infrastructure Fund with the objective of providing long term investment capital for projects in critical sectors of the economy. By pooling funds through the infrastructure fund, we can help bridge the gaps for infrastructure deficit in the country, unlock growth opportunities and generate reasonable returns for our investors which is a win for everyone. Also, we were recently appointed fund managers for the UPDC REITs which lends credence to our expertise and versatility in the industry. The REITs invest in high quality real estate assets giving investors the opportunity to participate in returns from that sector.
Finally, it is important to mention that we have in the pipeline new products that would excite our clients and we would continue to educate everyone on investment management and available options, because we believe in partnership. We seek to understand where our customers are going and help them find ways to get there quickly – building lasting wealth for generations.
Mutual funds as alternative source of investment
In recent years, we have seen a rise in the popularity of mutual funds because people are starting to understand the value that comes with investing idle funds, especially considering they are easily accessible and require low capital to start off. As an investor in Stanbic IBTC Mutual funds, you enjoy benefits such as flexibility, transparency, professional expertise of our fund managers and consistent returns. All these contribute to the increasing popularity of Mutual funds.
Also, with the Market crash in 2008, many investors have been wary of returning to the Capital Market and the reason mutual funds is seen as an alternative for investors with little or no knowledge is because it is well diversified. A wide range of low-risk mutual funds have been introduced to address investors’ concerns and provide them with sustainable returns.
Lastly, with inflation at double digits, investors are seeing the needs to invest and generate returns on their money in a bid to close the gap of depreciation in value and innovative products like ETFs, dollar funds and Infrastructure funds have helped to address specific challenges of clients.
Mutual fund investments are for both old and young and it is important to create awareness to encourage participation from retail investors. Digital channels like mobile phones are an easy avenue to access mutual funds from the confines of your home. This would appeal to younger or tech-savvy investors and ultimately help them develop self-discipline and a savings culture.
How Money Market Fund is improving savings culture among Nigerians
Based on our experience in the market, we know that many investors, especially new ones, would typically start with Money Market Funds because of its low-risk feature, hence investors tend to prefer this sort of investment vehicle because most investors are risk-averse than risk-loving. For these reasons, it is typical for investors to prefer this fund compared to the other risk-prone ones. Also, the fund offers flexibility, low barrier to entry and ease of redemptions. As such, investors would rather invest in Money Market Fund or mutual funds than keep their cash in the bank. It therefore, continues to appeal to a large pool of new and existing investors. For existing investors, they can see how easily they can save and earn returns. In fact, a lot of investors saved to get their first million in the money market fund because of how easy it helps investors to save. Yes, the money market fund has created a lot of millionaires.
ETF as a vehicle for diversifying investment
An Exchange Traded Fund (“ETF”) is a pooled investment fund that offers investors interest in professionally managed, diversified portfolio of investments. The ETF can be described as a basket of different assets (stocks or bonds). We have the Stanbic IBTC ETF 30 and ETF 40, which provide exposure to a diversified pool of stocks in the market at a very low cost. The performance mirrors the performance of the underlying index, as if you own those stocks directly. The ETFs are in fact gaining prominence as a cost-effective strategy among institutional investors and foreign investors and it is projected to account for a sizeable portion of global Assets under Management in the next few years.
As an investor, you benefit by having exposure to all the stocks in the basket at a very small amount which is the unit cost on one ETF unit. The stock provider considers the universe of assets and creates a basket of them. Investors can buy a share of that basket, just like buying shares of a company. What we have seen with ETFs is that knowledge and understanding of the product is low among investors. Global trends suggest ETFs would continue to attract new investors which is why we continue to emphasise investor education in Stanbic IBTC Asset Management.
How SIAML is using public forums to enable investors make informed decisions
Media rounds and conferences are important aspects of branding and advertising for companies, but they are also a veritable channel to reach target participants and provide insight that would enable them to make rational investment decisions. So far, we know that this has yielded tremendous results. Levels of participation in the market have increased which is evident by the asset under management in the Money Market Funds, and size of the Collective Investment Scheme industry. Also, following the prevalence of fraudulent investment schemes that have sprung up where some investors have lost significant portions or all their hard-earned monies, it is our duty as the market leader to create awareness. Investor education is one thing that we continue to do at Stanbic IBTC Asset Management, we have been running a programme called Financial Fitness, which is an all-round educational series on building wealth. We take it to institutions, schools, associations and so on.
Our aim is to continue to educate investors, and through that get them to appreciate the many advantages that mutual funds offer. Mutual funds are retail investments for everyone and can be accessed easily with Stanbic IBTC Asset Management with as low as N5,000. We continue to collaborate with different stakeholders in the industry to push the right information to the investing public. For us at Stanbic IBTC, we use this medium to reiterate our value proposition to our clients and our commitment to deliver competitive sustainable long term returns to our customers. Details can be found at www.stanbicibtcassetmanagment.com or by sending an email to email@example.com.
Outlook for the Nigerian capital market
The Nigerian capital market enables businesses to raise capital, scale growth and support the economy. It has grown significantly in the last decade and volume of trades and number of participants have also increased. We think the Nigerian capital market is poised to continue to play this role. Critical to these is the level of trust and transparency that will bring market participants, both corporates and retail, together. As a major player, we will continue to develop products, engage and educate investors to continue to foster investments in the market. We expect the bearish trend in the capital market to continue, given the frail macroeconomic conditions, such as the high inflationary environment and increased rate in the fixed income market as investors are moving to safe haven investments. We however expect to see some rally in the capital market towards the end of the fourth quarter as investors would try to position for FY’22 dividend.
FBNQUEST ASSET MANAGEMENT: A Truly First-Class Investment Partner
FBNQuest Asset Management is a leading investment manager in Nigeria. FBNQuest Merchant Bank is a subsidiary of the FBN Holdings Group. The company has earned a reputation for excellence among both individual and institutional investors through an array of investment offerings that includes actively managed portfolios (fixed income, equities, and multi-asset), passive strategies (ETFs), quantitative strategies, and thematic strategies. With an approach that focuses on clients’ specific investment needs, risk profile, and financial goals, “we rely on our key resources, intellectual capital, strong research capabilities, and cutting-edge technology to provide our clients with value-added insights, advice, and service,” said Mr. Ike Onyia, the Chief Executive Officer.
“We offer clients investment strategies in two main forms: customized solutions and pooled solutions. We assist clients in meeting their goals by utilizing pooled vehicles such as Collective Investment Schemes (CISs)/mutual funds. Collective Investment Schemes are investment vehicles used by both individual and institutional investors to diversify their portfolios into financial assets. We discover that a number of investors do not have available funds to invest in certain investments and earn attractive yields (for example bonds or treasury bills). Some investors may not have the time or expertise to determine when and how to take advantage of investment opportunities,” he added.
According to him, these issues are addressed by Collective Investment Schemes (CIS), which pool money from various investors to form a large investment fund, which is then professionally managed in accordance with their objectives and risk profile.
Onyia explained that FBNQuest Asset Management, a trusted investment partner, offers seven diverse CISs, including the FBN Money Market Fund, FBN Bond Fund, FBN Halal Fund, and two US Dollar denominated products, the FBN Dollar Fund and the FBN Specialised Dollar Fund, which allow investors to earn returns in US Dollars. FBN Balanced Fund and FBN Smart Beta Equity Fund are two others.
As a leader in the asset management industry and in keeping with the FBN Holdings Group’s distinct heritage, “we ensure that best practices, particularly with respect to investor protection, are paramount in everything we do. This includes ensuring that monies managed by FBNQuest Asset Management are held with registered investment custodians to ensure that investors’ funds are held separately and securely”, he added.
On the rise of mutual funds as an alternative form of investment in recent years, Onyia believes that Nigerians are increasingly focused on making their money work for them. “We all try to create multiple streams of income and ensure we have a sustainable future, given the rising cost of living in Nigeria. As a result, all of us must make a concerted effort to invest for the future in order to live the kind of life we want to live, rather than the one circumstance forces upon us”, he said
He went on to say that increasing industry publicity is an excellent way to encourage investors to invest through mutual funds. “We believe that youths should be specifically targeted to encourage them to invest because mutual funds provide them with access to professionally managed funds of various types and return profiles that are tailored to their individual objectives,” he advised.
Speaking about how Money Market Funds can be used to promote a savings culture in the country, Onyia explained that money market funds are SEC-registered products that provide Nigerians with access to higher yields in an investment option that preserves capital. “Not only has this improved the saving culture among Nigerians due to the relatively attractive yield it offers, but the funds are also structured to allow investors to invest and withdraw their funds at will, offering similar features to a traditional savings account. These characteristics have attracted investors to Money Market funds, resulting in an increase in the size of assets under management in the Money Market Fund sub-sector,” he explained.
The FBNQuest Asset Management CEO highlighted the importance of Exchange Traded Funds (ETFs), another viable investment platform, by purchasing a single unit of that security, which exposes investors to an underlying basket of securities and the indexes being tracked. As a result, it is an extremely efficient and low-cost method of diversifying portfolios. “ETFs can track assets such as equities, bonds, and alternative assets, giving investors access to a broader market with a single purchase,” he added.
FBNQuest Asset Management was named the Best Asset Manager in Nigeria at the 2021 edition of the EMEA Finance African Banking Awards. Over the last 15 years, the company has established a strong track record of creating value and building long-term relationships by leveraging technology, navigating increasingly complex financial markets, and assisting clients in meeting their investment goals.
On the outlook for the capital market as the year we approach the last quarter of the year, he stated, “In fixed income markets, we expect yields to remain attractive, in double digit territory, as evidenced by the yields of our mutual funds which are currently offering our clients double digit returns. We expect the rise in yields to be driven by rising inflation causing investors to demand higher compensating yields as well as rising government borrowing in Naira. These factors will allow investors benefit from higher yields on their investments. We advise that investors hunt for bargains in consistently profitable, high yielding and fundamentally sound stocks.”
We provide competitive and risk-adjusted returns to our clients within the context of existing regulatory framework.
Capitaltrust Investments & Asset Management Limited has a track record of providing best-in-class services to retail and institutional clients as a full-service asset management and financial advisory firm offering a suite of fund and portfolio management services, as well as investment and financial advisory services. With the goal of becoming Africa’s leading investment banking group by providing efficient financial services, the company has continued to provide credible and quality services as an investment firm through professionalism, resourcefulness, innovation, drive, and adherence to ethical standards. Seyi Oke, the company’s managing director, discusses the value proposition and services that distinguish the firm in the industry.
Investment offers at Capitaltrust Investments & Asset Management Limited
We provide both conventional and ethical investment options. On the ethical front, we have the Capitaltrust Halal Fixed Income Fund (CHFIF). The CHFIF is an open-ended unit trust scheme established through a Trust Deed. Only Shariah-compliant fixed-income securities, such as sovereign and sub-sovereign sukuks, corporate sukuks, leasing and trading contracts, are held by the fund. The fund’s global size is N2 billion. The fund pays out 80% of its profits in quarterly distributions to investors, with the remaining 20% reinvested in the fund. The fund’s primary goal is to generate competitive returns on investment in a Shari’ah-compliant manner while preserving capital.
We have the Nigeria Healthcare Development Fund (NHDF), Africa Infra Plus Fund (AIPF), and Capitaltrust Discretionary Fund on the conventional side of the business.
The Nigeria Healthcare Development Fund (NHDF) is a closed-ended private equity fund that invests in various healthcare sectors throughout the country. The goal of the NHDF is to raise capital from institutional investors, Pension Fund Administrators (PFAs), and High Net-worth Individuals to address issues in Nigeria’s healthcare sector while providing investors with competitive risk-adjusted returns. The Fund has a total capitalization of N100 billion and a first close of N7.5 billion.
Africa Infra Plus Fund (“AIPF”) is a ₦20.5 billion closed-end Infrastructure Fund structured to provide an investment platform for Nigerians and international investors to invest in infrastructure assets in Nigeria and other sub-Saharan Africa countries with Capitaltrust Investment & Asset Management Limited as its pioneer Fund Manager. The target of the Fund is to deliver an IRR of 25% and offers an attractive risk-adjusted investment option.
Capitaltrust Discretionary Fund is the company’s proprietary investment note. It provides qualified investors with the opportunity to invest their funds for a set period of time with guaranteed returns. This product is tailored to each investor’s needs, investment time horizon, and risk tolerance. The fund is invested in a wide range of assets, including listed stocks, securitized assets, government securities, real estate investments, registered mutual funds, private collective investment products, and other types of investment assets.
Being innovative is what distinguishes Capitaltrust Investments & Asset Management in the industry. Our products are always innovative and distinct from what other players provide. We provide competitive and risk-adjusted returns to our clients by offering unconventional solutions and executing them within the confines of the existing regulatory framework.
Mutual funds as a preferred form of investment
Mutual funds have gained popularity as an investment vehicle in the retail market. The mutual fund industry had over N1.5 trillion in Asset Under Management as of the end of H1 2022. This is because many people have begun to see the value in putting their savings in mutual funds rather than deposit money banks, where they will receive next to nothing in return.
More public education is needed to encourage more retail investors to invest in mutual funds. The industry’s current growth is primarily due to increased understanding of Mutual Funds and their operations. To get to where we need to be, more asset managers must invest in publicity and investor education. It is also necessary to use technology to expand the reach of Mutual Fund products.
How mutual fund is improving savings culture in Nigeria.
Prior to the widespread acceptance of mutual funds, excess liquidity from the surplus sector of the economy, particularly among individuals, was typically held by deposit money banks and kept out of the capital market (equity and debt). However, with the introduction of mutual funds, retail savings can now contribute to the growth of the Nigerian capital market. Most investors can see an immediate return on their “saving.” These are people who had been depositing their money in banks and receiving next to nothing in return. Seeing a vehicle that rewards saving culture has encouraged people to continue saving. Many people regard mutual funds, particularly those with low risk, such as our Halal Fixed Income Fund, as a safe haven for their money, guaranteeing asset preservation.
Outlook for the capital market
We saw a positive performance in the equity market, with the market closing at +17% Year-to-date (YTD) as of September 1, 2022. This YTD performance has been fueled by strong corporate performance and excess liquidity. Furthermore, the oil and gas industry has benefited greatly from the rise in crude oil, which has been above $80 per barrel for over four months. This could have been better, if not for the numerous inefficiencies in the industry. We anticipate a moderated performance in the equity market by the end of the year. As a result, we do not expect the year to end significantly different from the market’s current returns.
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