Mutual funds to challenge pension funds for sheer size –Coronation report

Chinwendu Obienyi

The total market value of the investments in the mutual funds segment currently stands at N1.3 trillion as at June 2020 and this segment could challenge the pension funds for sheer size in a few years to come.

Coronation Asset Management disclosed this to newsmen during its launch of its report titled; Shifting the appetite of Nigerian investors: From Savings to Mutual funds in Lagos yesterday.

Speaking via zoom, Head of Research at Coronation Asset Management, Guy Czartoryski, disclosed that the report states what fund management is all about while adding that the mutual funds is growing at a fast pace due to the current low interest rates. 

He noted that the total assets of mutual funds in four years have doubled up to about 305 per cent in nominal terms and added that it grew by 22 per cent in inflation adjusted terms and 42 per cent in nominal terms on the average compound annual growth rate (CAGR).

According to him, as at June 2020, the asset under management (AuM) of mutual funds management stood at N1.3 trillion and this is only one tenth of the size of pension funds which is currently at N10 trillion.

“We think this segment will challenge pension funds for sheer size in a few years to come. Although, we think that this will be a matter of time before it becomes large as it is a good form of investment and so investors will load funds in that segment but the baseline of regulation needs to be strong.

Secondly, in order for this segment to grow, there has to be a new level of risk management and education as to how investors can diversify assets across assets classes. Although the Securities and Exchange Commission (SEC) have been doing a good job in that regard but we need improved information on fund performance”, Czartoryski said.