What is a Mutual Fund?
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in a portfolio of diversified securities.
How are Mutual Funds structured?
Closed-end funds have a limited number of shares. If you want to purchase a piece of the fund after the close of the initial public offer (IPO), you have to purchase an existing share on the floor of the stock exchange.
Open-end funds have an unlimited number of shares. If you want to purchase a piece of the fund, the fund creates a new share and sells it to you.
Types of Mutual Funds
Mutual Funds are broadly classified as Debt Funds, Equity Funds and Balanced Funds:
Debt Funds: invest in different types of debt instruments
Equity Funds: invest in equity securities
Balanced Funds: invest in a mix of equity and debt securities.
Benefits of a Mutual Fund?
Income: It depends on the objective and distribution policy of a fund, Mutual Funds usually pay periodic income.
Diversification: A fund invests in a wide range of securities and asset classes depending on the objective of the Fund.
Liquidity: Shares of a Fund can be purchased/ redeemed through the Fund Manager or can be traded on the floor of the Nigerian Stock Exchange for a close ended fund.
Highly regulated: All approved Mutual Funds are regulated by SEC
What are the risks of investing in Mutual Funds?
The risk of investing in a Mutual Fund depends on the underlying assets of the Fund. Therefore the risk of any Fund will mirror the risk profile of the asset classes included in the Fund, however diversification reduces risk.
Is a Mutual Fund suitable for me?
Yes. Depending on your investment objective, risk appetite and investment horizon there are different Mutual funds that will cater for the investment needs of every investor.
How do i subscribe to a Fund?
Subscriptions can be made during the Offer period at the Offer price through the Fund Manager or any of its appointed placement agents. Subsequently, shares of an open ended Fund can be purchased through the Fund Manager at end of day price of the Fund or in the case of a closed ended fund, on the floor of the Nigerian Stock Exchange.
I am a non Nigerian citizen, can I invest in a Mutual Fund?
Yes, you can. However if you intend to repatriate your income and principal at a future date, it is advisable for your Fund Manager to obtain a Certificate of Capital Importation (CCI) within 48 hours of receipt of funds to be invested from the bank through which the funds were remitted. A CCI allows you to source foreign exchange at the CBN official rate at the point of repatriation.
What is the minimum subscription?
Varies from fund to fund. However the minimum subscription for all Access Investments and Securities mutual fund offering is NGN50, 000 and NGN10, 000 for every subsequent investment.
Do I have a say in the investment decision of a Mutual Fund?
No, the Fund Manager takes all the investment decisions on the Fund’s behalf based on the guidelines set out in the Fund’s Trust Deed.
How do I track the performance of a Fund?
The daily prices are published on the notice board of the NSE, leading Nigerian newspapers and on the website of the Fund Manager.
How do I know the value of my investment?
The value of your investment at anytime is the Bid price per share multiplied by your Number of units held.
What is the tenor of my investment in a fund?
There is no restriction on the tenor of your investment. Shares of a listed closed end fund can be traded on floor of the NSE whilst the shares of an open end fund will be redeemed by the Fund Manager, however a handling fee is payable on any redemption effected within three (3) months of subscription.