Stanbic IBTC and FBN funds have attracted the most inflow from money market investors so far this year, a BusinessDay year-to-date analysis of the 19 money market funds listed on the Security and Exchange Commission (SEC) shows.
Out of the total N554.98 billion asset managed by money market funds, Stanbic IBTC reported a Net Asset Value (NAV) increase by 0.76 percent from 47.19 percent market share it recorded for the week ended January 4th 2019, to N266.13 billion or 47.95 percent for the week ended April 18th 2019 compared.
SEC figures also showed that FBN money market fund was next after Stanbic IBTC in terms of NAV as it reported 28.33 percent or N157.25 billion for the review period.
ARM, AXA Mansard and Afrinvest Plutus Money Market Funds also made the list of funds with the highest NAV as a share of the entire asset managed by the fund with 9.97 percent, 4.76 and 3.64 percent, respectively.
The need to analyse the funds in the money market asset class arises from the fact that the investment portfolio has the highest market share of the Mutual funds listed on the security exchange.
Money market funds as a percentage of total mutual funds increased by 0.41 percentage points from 75.64 percent or N487.5 billion for the week ended January 4th 2019 to 76.05 percent or 554.99 percent for the week ended April 18th 2019.
“Funds managers will prefer to put investments of unit holders in instruments that have the highest yield and lowest possible risk,” Johnson Chukwu, MD, Cowry Asset Limited said.
Money-market funds are open-ended mutual funds that invest in short-term debt securities such as treasury bills, certificate of deposits, and commercial paper.
They are usually managed by skilled fund managers who are competent to optimise shareholder returns by arranging a balanced mix of portfolio.
The closest to the money market funds with respect to NAV is fixed-income funds. It reported asset under management of N70.44 billion or 9.65 percent share of the entire NAV managed by the listed mutual funds.
Real estate funds and mixed-income funds were next in line as they both reported market share of 6.75 percent and 3.78 percent respectively.
For the week ended April 18th 2019, Bond funds, equity-based funds and ethical funds reported the least share of the mutual funds asset as they had 2.23 percent, 1.8 percent and 0.81 percent respectively.
On the reasons why money market fund reported the highest AUM in the review period, an analyst from Alpha Morgan Capital Managers Limited, who asked not to be identified, said it attracts the highest investors because it is risk-free.
“That is, the return will always be positive and it is short-term. Investors are sure that they will get their return at the end of the day, no matter how small it is,” the analyst said.
The Alpha Morgan investment analyst explained that “smaller investors can also participate in those funds and enjoy full benefit the fund managers are able to provide for them”.
According to him, that is the reason more people are inclined to investing in money market funds as compared to other mutual funds.
A further analysis of SEC data on the money market funds revealed that the unit price of the analysed funds stood at N100 each except for AXA Mansard, legacy and ARM money market fund which was N1 each.
They however outperformed the Nigeria Stock Exchange All Share Index (NSE ASI) for the review period.
The benchmark of the NSE ASI return for the period between January 4th 2019 to April 18th 2019 was at -1.8 percent, as compiled from the Bloomberg terminal.
The more than one quarter analysis of the money market funds revealed that PACAM and Meristem money market funds occupied the bottom of the pyramid in respect to their asset under management.
The former had N831.65 million of the entire market share of money market assets, leaving the latter with the least NAV of N776.04 million.
Although Meristems money market NAV was higher than the asset managed by Legacy equity based fund with NAV of N623.7million, the 6th highest fund under the equity based funds.
Source: By Okafor Endurance