Comercio Partners, an investment bank, advised investors to allocate a significant portion of their portfolio to money market and dollar mutual funds.
According to the firm, the move will help investors benefit from the recent interest rate hike by the Central Bank of Nigeria and also avoid the risk of a possible further depreciation of the naira.
Co-manager/founder, Comercio Partners, Nnamdi Nwizu, gave the advice in the Comercio Investors’ Education Series report.
The report explained, among other things, the meaning and types of mutual funds.
The report also differentiates mutual funds from other types of investments like stocks, fixed income securities and bonds.
The company added: “Mutual funds are structured, they are tailor-made to suit the desires and tastes of the group of investors in the fund. Because they are structured, they can be designed to meet different investor needs. Mutual funds can be structured as equity, debt or hybrid funds.
According to the firm, the main types of funds are: equity funds, debt funds, hybrid funds and money market funds, adding that other types include income funds, tax savings funds, capital protection funds and pension funds.
“Mutual funds can also be categorized by risk such as low-risk, medium-risk, and high-risk funds, emerging market funds, global funds, foreign or international funds,” Comercio added. Partners.
While noting that mutual funds in Nigeria recorded an 11.02% increase in net asset value to N1.388 billion year-to-date, year-to-date, June 2022, against 1.250 billion naira in the corresponding period of June 2021, Comercio Partners however noted that money market mutual funds led the growth, accounting for 41.93% of the total net asset value of the entire market.
He noted that it rose to N582.296 billion in June 2022 from N477.494 billion in the corresponding period of 2021.