Expanding Access to Nigerian Capital Markets

Digitally Accessible Mutual Funds Drive Economic Inclusion and National Investment

Accessing the Nigerian capital markets has never been easier or simpler. Today, the Nigerian investment industry offers a wider range of products, enabling an increasingly younger and less affluent segment to invest affordable sums online, through solutions that are now accessible from a phone. portable.

In the past, Nigerians with enough capital to invest would simply open basic deposit accounts that mirrored the performance of high-yielding treasury bills underwritten by the Nigeria Deposit Insurance Corporation (NDIC). Then, 18 years ago, mandatory employer-provided pension fund schemes run by professional pension fund administrators began to attract a greater share of domestic investment when employees began to allocate funds to retirement savings accounts. Today, the Nigerian retirement savings sector is worth N13.4 trillion, in an economy with an annual government budget of around N17.3 trillion.

The massive growth of the pension fund industry in recent years indicates the volume of savings available in the Nigerian economy. It also points to even greater growth potential if more Nigerians had access to a wider range of tools to access the country’s capital markets.

Admittedly, the country’s experience with pension funds has developed a much more favorable attitude to investment in general, and to investment funds in particular. Today, many more Nigerians, witnessing the growth of their retirement savings, believe it makes sense to allocate additional discretionary cash to mutual funds.

With mutual funds now more likely to outperform core deposits, the independent fund industry in Nigeria has grown by 30% in the past five years alone, currently accounting for N1.5 trillion in investments. While still relatively small compared to the pension fund industry, these numbers demonstrate the potential for growth.

All that’s missing to spur even greater participation by ordinary Nigerians in the country’s capital markets are more products and solutions – and ever-easier online ways to access them.

To that end, Coronation Asset Management has already launched four exciting funds:

– Coronation Money Market Fund

– Coronation Balanced Fund

– Coronation Fixed Income Fund

– Coronation Fixed Income Fund

These existing funds will very soon be supplemented by its new Multi-Asset US Dollar, High Net Worth Fixed Income and Infrastructure funds.

Unlike the equity-focused NGX Exchange, which has traditionally attracted an older, more affluent group of investors, steeped in history and deep knowledge of equity investing, the combination of accessible, easily understood and Transparently Managed Coronation Asset Management offers a much younger, less affluent segment of Nigerians with access to funds approved by the Global Investment Performance Standards (GIPS).

It is important to point out that getting GIPS approval in Nigeria is no small feat. GIPS approval means funds are managed in accordance with global best practices. This is particularly reassuring for new investors who may not understand the intricacies of investing, but need to be confident that their investments will be professionally and responsibly managed in accordance with global best practice and full client oversight.

One of the great strengths of the Nigerian capital market today is the proliferation of online mutual funds. The platforms are opening up the country’s capital market to younger, more digitally literate customers.

The proliferation of these platforms and the funds they offer, while not all created in the same way or managed to the same global standards of professionalism or transparency, nevertheless open up the Nigerian capital markets to a segment of investors. investors wider than ever before.

In short, leveraging digital technology and global fund management best practices to make many more funds available for larger investments across a much wider range of industries and sectors increases the opportunities and potential capital growth for all.