A mutual fund is an investment portfolio funded by several investors with the pooled fund invested in diversified holdings to maximize profit. Mutual funds are managed by professional fund managers who invest the fund’s capital & attempt to make a profit on it. The pooled fund is invested in securities such as bonds, stocks, money market instruments & so on. The profit made is shared to all the investors based on their contribution to the fund.
Investing in mutual funds has some advantages, the main one being diversification. Mutual funds do not invest in a single holding, instead, they spread their investment across several holdings. This way, they can minimise loss. If one of the securities underperforms, it will have little effect on the overall portfolio.
Another advantage of mutual funds is affordability. It accommodates both major & minor investors. As a small investor, shares of major companies may be out of reach but through mutual funds, you can invest in these companies. Also, your investment in mutual funds is safe as they are regulated. You can easily get your money out of open-ended mutual funds anytime you want to opt-out.
In Nigeria, there are several mutual funds to choose from. Here are the top 5 mutual funds in Nigeria.
Top 5 Mutual Funds in Nigeria
Stanbic IBTC Asset Management (Stanbic IBTC Mutual Funds)
Stanbic IBTC Asset Management offers you the opportunity to invest in one of their many mutual fund portfolios. The portfolios are discussed below.
- Stanbic IBTC Nigerian Equity Fund
This is the largest open-ended equity fund in Nigeria. Its net asset is currently worth several billions of Naira. The fund was launched on the 28th of February, 1997 at the rate of #1,000 per unit. The fund aims to achieve a long-term capital appreciation of its assets by carefully investing in selected high-quality securities. The fund invests in securities quoted on the Nigerian Stock Exchange (NSE) as well as those approved by the Securities & Exchange Commission (SEC).
Stanbic IBTC Nigerian Equity Fund invests at least 60% of its assets in equities of top companies listed on the NSE. The remaining 40% is in Fixed Income Securities such as money market securities & bonds. This fund is highly popular in Nigeria and is one of the most subscribed mutual funds in the country.
- Stanbic IBTC Dollar Fund
This is a dollar mutual fund that helps investors grow their money in a foreign currency. At least 70% of the Stanbic IBTC Dollar Fund is invested in high-quality Eurobonds. Up to 25% of the portfolio is invested in short term USD deposits. A maximum of 10% of the portfolio is invested in USD equities that are approved & registered by the SEC.
- Stanbic IBTC Bond Fund
The Stanbic IBTC Bond Fund helps you gain competitive returns of investments with moderate risks. At least 70% of the fund is invested in high-quality bonds. A maximum of 30% is invested in quality money market instruments including treasury bills.
- Stanbic IBTC Shari’ah Fixed Income Fund
The Shari’ah fund is targeted at ethically minded investors. It helps them invest in Sukuks & other Shariah compliant securities.
- Stanbic IBTC Invest Beta
Stanbic IBTC Invest Beta allows you to invest in mutual funds for as low as #5,000. It helps you maximise your income & enjoy long term capital appreciation.
You can learn more about Stanbic IBTC Mutual Funds by visiting the Stanbic Asset Management website here.
FBN Quest Asset Management (FBN Mutual Funds)
- FBN Money Market Fund
The FBN Money Market Fund is another open-ended mutual fund in Nigeria. It is also popular among investors and has several billions of naira worth of assets. The fund is suitable for short- medium-term investors looking for quick turnover from their investment.
FBN Money Market Fund invests its assets in a diversified portfolio of short-term, high-quality money market securities. Some of these securities include Commercial Papers, Bankers Acceptances & Certificate of Deposits issued by top Nigerian banks, & Treasury Bills.
It is worth stating that you don’t need several thousands of naira to invest in FBN Money Market Fund. You can invest in the fund with as little as #5,000. Some other benefits of investing in this fund include a high level of security, low risk, competitive returns & higher rates than standard bank savings accounts. You can add funds to your FBN Money Market Fund at any time.
- FBN Fixed Income Fund
This fund is suitable for a diversified investor willing to take risks. It is a medium-long term investment fund that preserves & maximises return on capital while maintaining a high level of liquidity. Assets of this fund are primarily invested in securities issued by the government & corporate institutions. It may also be invested in high-quality money market securities.
Minimum starting investment for this fund is #50,000 with dividends paid every 6 months. Returns are competitive & the risk is low-medium.
- FBN Balanced Fund
FGN Balanced Fund is for long term investors willing to take risks. The fund is invested in a diversified portfolio of high-quality Nigerian companies & Long-term debt instruments of government (both federal & states). The fund is also invested in quality money market securities like Treasury bills & Commercial Papers. Minimum starting investment for this fund is #50,000. Dividends are paid annually. Also, returns are competitive with medium risk.
- FBN Eurobond (USD) Fund
FGN Eurobond Fund provides immunity to naira depreciation as your investment is in USD. The fund is invested in USD denominated debt instruments issued by the Nigerian government & corporate institutions. The minimum investment is $2,500 for individuals while for institutions it is $100,000.
- FBN Nigeria Smart Beta Equity Fund
It is a pure equity fund that invests your money mostly in top Nigerian companies listed on the NSE. The fund is suitable for a high-risk investor with long-term goals. Returns are competitive & the minimum initial investment is #50,000.
You can read more about FBN Mutual Funds here.
Quantum Zenith Asset Management (Zenith Equity Funds)
Zenith Equity funds invest its assets predominantly in Nigerian equities & grade fixed-income securities. It is an open-ended fund designed for investors seeking to optimise their profit at minimal risk. There are four mutual fund options to invest in depending on your pocket size & appetite for risk. These are;
- Zenith Money Market Fund
It is short-medium term low risk fund that began in December 2017. The fund seeks to provide current income while maintaining liquidity & price stability. It maintains a stable price of #1 for all classes of investors that value liquidity & security of assets. The minimum investment is #10,000. Additional purchases can be made at a minimum of #500. The fund attracts a management fee of 1%.
- Zenith Income Fund
The fund started in September 2008 & is medium-long term. This fund attempts to earn returns above inflation rate through investment in fixed-grade income securities. It uses Nigerian treasuries & bonds to achieve a high total return on investment over the long term. The minimum investment is #25,000 while minimum additional purchase is also #25,000.
- Zenith Equity Fund
Zenith Equity Fund is a medium-term fund. It began in September 2008. The minimum investment is #25,000 and minimum additional purchase is also #25,000. The fund uses Nigerian treasuries & equities to achieve a high return for investors. Management fees for this fund is 3.5%
- Zenith Ethical Fund
It is a high-risk medium-long term fund for investors that have social responsibility constraints. The fund invests in carefully selected equities & fixed grade income securities that meet these constraints. The minimum investment is #25,000 while additional purchase must also be #25,000 minimum. Management fees is 3.5%
You can learn more about Zenith Mutual Funds from here.
United Capital Mutual Funds
United Capital offers investors the opportunity to invest in 6 different mutual fund portfolios. The portfolios are discussed below.
- United Capital Balanced Fund
The United Capital Balanced Fund is an open-ended fund that allows investors to invest in a diversified portfolio of securities. It is a low-risk fund for investors seeking to optimise profit while minimising risk. You can invest in this fund with as low as #10,000 & achieve long term capital appreciation & income. Benefits of this fund include no withholding tax & VAT on dividends & 90 days minimum holding period. Other benefits are high liquidity, free entry & exit, daily valuation, & opportunity to invest on behalf of minors.
- United Capital Fixed Income Fund
This is another low-risk fund. Assets of this fund are invested in bonds & high-quality money market securities. The minimum initial investment in this fund is #10,000.
- United Capital Equity Fund
United Capital Equity fund invests on quoted equities that are traded on the floor of the NSE. The fund is suitable for long term investors seeking high yield. The fund can yield high returns over both short & long terms & the minimum initial investment is #10,000.
- United Capital Money Market Fund
The Money Market Fund allows investors to invest in quality money market instruments like Treasury Bills & Certificates. It is low risk & dividends are paid quarterly. It provides high liquidity, capital preservation & moderate-income generation.
This fund is suitable for corporate & individual investors who seek to enjoy good returns on idle cash. The fund offers easy entry & exit, & redemption is within 24 hours. Minimum initial investment is #10,000 & multiples of #5,000 thereafter.
- Wealth for Women Fund
This is a mutual fund targeted at women & seeks to encourage them to imbibe a savings culture. Assets of this fund are invested in fixed income instruments. The fund also invests in companies that have significant women representation on their board & management teams.
Up to 80% of the fund’s assets are invested mostly in Naira denominated fixed income & high yielding instruments. About 20% are invested in carefully selected stocks that are listed on the NSE. Minimum initial investment is #10,000 & multiples of #5,000 thereafter.
- United Capital Nigerian Eurobond Fund
It is a dollar-denominated mutual fund that invests in Eurobonds floated by the Federal Government of Nigeria, & other qualifying Eurobonds registered by the SEC. It provides a good hedge against naira depreciation, & significantly higher returns than domiciliary accounts. Minimum entry amount for this fund is $1,000 & multiples of $500 thereafter.
You can read more about United Capital Mutual Funds & their benefits from https://www.unitedcapitalplcgroup.com/asset-management/service-suite/here.
ARM Mutual Funds
ARM offers 6 mutual fund portfolios to choose from depending on your interest.
- ARM Aggressive Growth Fund
The fund invests primarily in equities & seeks to provide long term cover against inflation to investors with an appetite for high risk. It is open-ended & suitable for long term investments. The minimum initial investment is #50,000.
- ARM Discovery Balanced Fund
The Discovery Balanced Fund invests in equities & fixed income securities. It is suitable for investors seeking high capital growth over the long term. The minimum initial investment is #10,000.
- ARM Ethical Fund
This mutual fund is suitable for investors seeking Shariah compliant investment. The minimum initial investment is #10,000.
- ARM Eurobond Fund
ARM Eurobond invests in USD denominated Eurobonds. It is suitable for investors seeking medium-long term investment.
- ARM Fixed Income Fund
It is a low risk, an open-ended mutual fund that helps investors to achieve medium-long term goals. Assets of the fund are invested in high quality fixed income securities such as money market instruments.
- ARM Money Market Fund
The fund offers a higher rate on savings than a traditional savings account. It is great for short term investment as you can quickly access your money at any time.
You can read more about ARM Mutual Funds from here.
Which is the Best Mutual Fund to Invest in Nigeria?
The mutual funds discussed in this post are some of the best in the country based on performance over the years. If you are looking to invest in mutual funds in Nigeria, consider one of these.
Can I lose money on Mutual Funds?
Yes, you can. Most mutual funds are not guaranteed and you can lose money on your investment depending on the level of risk. You will be informed of the level of risk associated with a mutual fund before parting with your money. The higher the risk level of a mutual fund, the more profit you can make & the higher the possibility of incurring a loss.
Conclusion (Invest in Mutual Funds in Nigeria)
The best mutual funds in Nigeria have been discussed above. If you want to invest in mutual funds in Nigeria, consider investing in one of the funds discussed in this post.