The Securities and Exchange Commission has expressed optimism that the Collective Investment Scheme (CIS) or Mutual funds in the capital market will hit N1.5 trillion before the end of the year.
CIS also is known as Mutual Funds is an arranged pool of funds managed on behalf of investors by a professional money manager which may invest in; venture capital, portfolio of stocks Bonds and other securities.
Acting Director-General SEC, Ms. Mary Uduk, at a forum sponsored by the commission in Lagos at the weekend. Uduk said the commission is setting up more strategies to develop the mutual fund segment in the Nigerian capital market. Uduk who was represented by the Head, Office of Economics at SEC, Okey Umeano, noted that the segment which currently stands at N1.2 trillion is growing and urged retail investors to use the funds as a means to access the market.
“In any advanced market, the Collective Investment Scheme form a very big part of the market.
“We at the commission have discovered that some of the investors who lost their savings during the crisis in 2008 are low on confidence.
“That is the reason why we are encouraging retail investors to go through these mutual funds because they are set up and approved by capital market operators and the SEC and the SEC regulates them (operators).
“Currently the size of the segment stands at N1 trillion but we expect it to grow much higher.
“So we are urging retail investors and high net worth investors to use the mutual fund’s route to enter the market”, Uduk said. Corroborating her, Divisional Head, Economic, Research and Policy Management, SEC, Dr. Afolabi Olowookere, noted that the commission expects to see a significant rise in mutual funds going forward.
According to him, about 480,000 investors had keyed into that the investment segment.
“We still expect that size to get to N1.5 or N2 trillion and the reason is that it provides an avenue for retail investors to buy.
“The mutual fund may not have very high return but definitely it won’t have low return and with the SEC at the forefront of financial inclusion, we are pushing collective investment scheme because it brings some form of stability for investments.
“The number of units of account in that segment currently stands at 480,000 investors and it would likely increase”, he said. Uduk said domestic investors’ transactions in January outperformed foreign investors’ execution by 40 percent, which accounted for N70.32 billion.
According to her, the breakdown of domestic investors’ transactions shows that the domestic institutional transactions accounted for N83.47 billion, while domestic retail transactions stood at N81.67 billion.
Uduk said the trend re-emphasized the need to increase retail investors’ participation in the market. She stressed the importance of not allowing uncertainties to dampen our resolve to attain the strong capital market of the nation’s dream.
“In spite of these trends, clearly, the fundamentals of our markets and economies remain solid and promising as astute investors know.