Nigeria’s mutual funds rose to N1.6tn in 2020 – Coronation Asset Report
The Coronation Asset Management Limited’s latest report has declared that Nigeria’s mutual funds rose to N1.6tn as of the end of 2020.
The organisation made this known on Monday in its report on mutual funds titled ‘Comparing mutual funds – Apples and oranges; why harmonised reporting is the next step forward’.
The report read in part: “The mutual fund industry in Nigeria is growing fast. The total assets of the mutual fund industry in Nigeria grew by 50 per cent in 2020, to N1.6tn.
“Yet this is only 14 per cent of the size of the much larger pension fund industry. So, it needs to keep growing in order to become a financial force.”
The Coronation Research team, headed by Guy Czartoryski, said the report examined what happens when an investor seeks comparative information on mutual funds, and takes the example of naira-denominated fixed income funds.
Czartoryski said the data reported by these funds was very diverse, with different accounting methods used to arrive at very different unit price performance data.
He said this meant that investors lacked the kind of easy comparisons between funds that existed in developed markets, comparisons that could be found on the Morningstar and Financial Times websites.
According to him “In our view, Nigeria’s diverse measures stand in the way of the development of the industry.
“Although it is growing rapidly, we believe that Nigeria’s mutual fund industry requires several more years of growth to reach the N12.3tn total size of Nigeria’s pension funds.”
“Harmonisation of its reporting may be a difficult task, making the effort to lead to mutual funds becoming a significant force in Nigeria’s financial infrastructure.”
The report said if Nigerian funds must play in the international league, they needed to adopt Global Investment Performance Standards.
It stated that mark-to-market accounting was one of the cornerstones of GIPS, while noting that very few Nigerian fund managers applied GIPS at the moment,
The report read: “Global investors have access to data on thousands of fund across the world and, thanks to adoption of GIPS, the data is comparable and it is free. Anyone can use the Morningstar and Financial Times websites to compare thousands of funds.”
The report stated that the first step was to harmonise reporting among Nigeria’s mutual funds.
GIPS, it added had to be a long-term goal because introducing GIPS was expensive and takes time to enforce.
According to the report, harmonising the reporting of Nigeria’s Mutual Funds was a necessary step to creating comparable UP data and helping the industry to achieve its potential.
