Simplified! How to Invest in the Nigerian Mutual Funds

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One of the ways of growing your wealth is to invest in a mutual fund. Mutual fund investment provides an easy avenue for anyone to make good returns on their money with minimal risk. It is very suitable for those that do not have the time, large capital or expertise to invest in the stock market, real estate, bonds, treasury bills and other forms of investment.

Mutual Fund Explained

Mutual fund is an investment scheme which invests monies pooled from many investors into various forms of investments like stocks, bonds, treasury bills, and other capital and money market securities.

Periodically, the profit made from the investments is shared among the various investors according to the amount of each person’s investment.

Advantages of Mutual fund  investment

1. It helps you to be able to get involved in investments that you wouldn’t have been able to do because of limited capital. You can invest in what wealthy investors invest in even with your little capital via mutual fund.

2. Through mutual funds you have the privilege to access professional asset management at a low cost. Your money  and investment is  been managed by qualified asset and portfolio managers at a low fee that wouldn’t have been possible if you were to hire and  pay for the services of such professionals yourself.

3. You enjoy easy liquidity of your investment. You can easily get out your capital or profits from the mutual funds. With your mobile phone you can request to have your funds and your money will be credited to your account. However, charges may apply to your interest  if your liquidate before a stipulated period after investment.

4. It helps you to enjoy easy  diversification of your investments. Most mutual funds invest in a variety of investments which reduces the risk associated with capital loss. You achieve a high diversification of your investments with little capital by investing in mutual fund.

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5. It saves you the time of making investment decisions. I used to spend days and even weeks trying to select stocks to invest in by analysing several indices. I still do that. However, not as often as I used to previously since I started investing in mutual funds.

Disadvantages of Mutual Fund Investment

1. It may make you lazy to research your own investments and to build your own investment knowledge since other people are making the investment decision for you.

2. You may consider the  service fees to be too high for you. Many fund managers charge an average of 2 % as service fee, but it is usually not more than 5% of the profits from your portfolio. Aside the charge on the profit you make, some also charge you a little service fee  in that same range for managing your portfolio.

3. It limits your control over what you wish to invest in. As I said, the fund managers have the control over what it invest the fund’s resources into.

My Advice

Invest a part of your money into mutual funds but also use a part of your money to pick your own stocks yourself in order to build your financial knowledge and skill in the stock market.
If you are busy and don’t have the time to pick your own  stocks or you are inexperienced in stock market investment and don’t want to get your fingers burnt,  put your money in a mutual fund.

The benefits you can derive from mutual funds is far above the little service fees that you have to pay.

Types of Mutual Funds
There are various ways of classifying mutual funds based on several factors. However, here is the most common classification:

1. Capital market ( stock ) fund : These fund invests majorly in equities like stocks and bonds.  This type of mutual fund has a high yield potential but also has a significant risk of capital loss.

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2. Money market ( fixed income ) fund : These are mutual funds that invest in fixed income securities like treasury bills, certificate of deposit, commercial papers. The return for this type of mutual fund is usually moderate and it has little or no risk of capital loss.

3. Hybrid ( mixed income ) fund : As the name implies, these are funds that invest in both equity and money market. For example, you can have a hybrid fund that invests 40% on capital market and 60% on money market.

Top Mutual Fund Managers in Nigeria

There are several mutual fund managers or institutions in Nigeria. Many banks have their own mutual funds scheme. However, from my personal experience over the years here are the mutual funds I wish to recommend to you based on their service delivery and reliability.

1. Stanbic IBTC Asset Management Limited:

This is an asset management associate of the Stanbic IBTC Holdings, a member of Standard Bank Group, a member of Standard Bank Group, which is the largest banking group in Africa. They are the largest and most used  mutual fund provider in Nigeria.

Stanbic IBTC Asset management has several mutual fund plan categories which includes:

Stanbic IBTC Money Market Fund ( SIMM)
Stanbic IBTC Guaranted Investment Fund ( SIGIF )
Stanbic IBTC Bond Fund ( SIBOND )
Stanbic IBTC Balanced Fund ( SIBAL )
Stanbic IBTC Ethical Fund ( SIEF )
Stanbic IBTC Nigerian Equity Fund ( SINEF )
Stanbic IBTC Imaan Fund ( SIMAAN )

2. Investment One:

This is also one of the best in the mutual fund industry.
Their mutual fund plan category includes:

Guaranteed Income Fund (KGIF)

Guaranteed Investment Saving (GIS)

Nigerian International Growth Fund (NIGFUND)

Child Trust

3.  FBN Capital Limited:

Owned by First Bank. They provide financial solutions to both individuals and corporate organizations. They are also good.

First Bank Capital Limited mutual fund plan categories includes:

FBN Money Market Fund

FBN Heritage Fund

FBN Fixed Income Fund

4. Zenith Capital Limited:

It is owned by Zenith bank and offers a variety of financial services and advice to investors. Their mutual fund plan categories includes:

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Zenith Equity Fund

Zenith Ethical Fund and

Zenith Income Fund

5. United Bank For Africa (UBA) Asset Management Limited

This is also one of the best mutual fund in Nigeria.

UBA mutual fund offers a variety of plan categories which includes:

UBA Money Market Fund

UBA Bond Fund

UBA Equity Fund

UBA Balanced Fund

6. Mansard Money Market fund.

7. Asset & Resources Management (ARM)

8. Sterling Capital Market Limited.

Minimum Initial Investment Amount.

Several futual fund institutions have their various minimum initial investment amount. This is also affected by the type of investment plan you are going for. Some fund managers, like Stanbic IBTC asset management limited allow at least #5000 as initial investment for mutual fund while others allow at least #50,000 or #100,000.

How to Commence

Just visit any of the listed asset management institutions and you will made to fill a registration form for the investment.

For some mutual fund managers, you can  register for the investment online and fund your account with them via internet banking without even going to the bank or the fund managers’ office.

You can also monitor your portfolio growth, profits,  make top up to your initial investment and make redemption or request for liquidation of your investment right from the convinience of your home online.

Redemption request takes about 5 working days to process after the request has been made.

If you have any questions or comments regarding mutual fund investments kindly let me know using the comment section below.


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