Exchange Traded Funds Rise By 1,695% To N5.17bn
The total asset under management of Exchange Traded Funds listed on the Nigerian Stock Exchange (NSE) has increased significantly from N287.5 million in December 2011 to N5.17 billion as at February 8, 2017, representing an increase of 1,695 per cent.
The total asset under management of Exchange Traded Funds listed on the Nigerian Stock Exchange (NSE) has increased significantly from N287.5 million in December 2011 to N5.17 billion as at February 8, 2017, representing an increase of 1,695 per cent.
Reviewing the fund for 2016, showed that it appreciated by N780 million or 19.4 per cent to reach N4.79 billion in 2016 from the ETF Market Capitalization of N4 billion in 2015.
The Report by Exchange disclosed that there was 19.41 per cent increase in ETF AUM listed on the Exchange from 2015 to 2016, primarily due to the listing of the Vetiva S&P Nigerian Sovereign Bond ETF.
“The Vetiva Industrial ETF recorded the largest price decline in 2016 of 20.51per cent when compared to ETFs in other sectors.
“On the flip side, the NSE’s NewGold ETF saw a sharp increase, as its value climbed 94.73per cent during the year, a clear indication of investor’s flight to safety sentiments,” the report explained.
An ETF is a type of fund that tracks the performance of an index, or a commodity. ETF is traded like shares on a stock exchange and derive their value from the index or commodity they track. ETFs provide investors the opportunity to diversify their portfolios without going through the rigours of selecting individual securities.
According to Leadership findings, the Exchange as at February 8, 2017 had nine ETFs that include Newgold ETF, Newgold Vetiva Griffin 30 ETF, Lotus Halal Equity ETF, Stanbic IBTC ETF 30, Vetiva Banking ETF, Vetiva Consumer Goods ETF, Vetiva Industrial ETF, Vetiva S & P Nigeria Sovereign Bond ETF and the newly listed SIAML Pension ETF 40.
However, SIAML Pension ETF 40 is made up of 40 stocks on the NSE in terms of capitalisation, liquidity and other Pension Commission (PENCOM) investment guidelines.
However, despite the growth in the numbers of ETF on NSE since its introduction on the NSE in December 2011, yet, it still struggles with market acceptance and participation.
The chief executive officer, NSE, Mr. Oscar Onyema, recently said, “The listing of SIAML Pension ETF 40 which marks our first listing in 2017, lends credence to our commitment to championing and advocating for growth of the ETF market in Nigeria. With diversified investor base, our market offers issuers and their products access to capital and visibility whilst delivering transparency and liquidity to investors.
“The ETF market in Nigeria was launched in December 2011 on the NSE with cross listing of Newgold ETF and we are have become the second largest and fastest growing ETF market in Africa boasting of additional eight indigenous ETFs with AUM totalling about N5.4 billion and over 200 per cent cumulative growth in turnover over the last four years; a feat we have all achieved, together through unwavering diligence and determination to grow this segment of our market.
“Although we are yet to attain our desired goals, the Exchange will continue to support the growth of ETF market through our dedicated Product team working with existing and potential issuers to expand product universe, promote liquidity and transparency on product structures through appointed liquidity providers who are obliged to provide bid and ask prices for defined percentage during trading session, and increase product awareness through our annual ETF seminars/workshops as well as publishing a wide range of educational resources on our website and different media platforms.
“It is against this backdrop that I wish to encourage fund managers to take advantage of available opportunities by partaking in and contributing to the growth of ETF market through product innovations that meets investors’ needs and appetite.
“I encourage investors to take advantage of the benefits presented by investing in ETFs such as lower cost, diversification and liquidity. I also urge fund issuers to continually make available educative promotional materials on ETFs that will help investors make informed decisions,” he said.
He said the Exchange would continue its collaboration with market stakeholders- Regulators, Dealing Member Firms, Fund Managers, Issuing Houses, among others to collectively promote increased awareness and education on ETFs amongst the investor community.
According to executive director, Stanbic IBTC Asset Management, Shuaib Audu, investors tend to prefer direct equities investment.
He noted that the low participation in ETFs could be addressed when the brokers are made to facilitate and actively engage in the issuance of ETFs.
He said the total trade on direct investment in the past year was a little under N1 trillion, a sharp contrast to N250 million quoted as the combined total value of ETF traded by issuers on the stock exchange.
He however applauded the NSE over what he called the right steps taken towards enhancing investors’ education to drive home the benefits of ETF participation.
Some of the benefits of ETFs as highlighted during the workshop were the enhancement of flexibility, transparency, investment diversification, liquidity and low cost.
Speaking at the listing of SIAML Pension ETF 40, Audu explained that investors can obtain a broad exposure to several securities in the NSE pension Index which spans across various sectors by investing in the Fund.
He noted that market stakeholders are working to drive domestic investors’ participation in ETFs market.
Also, the executive director, Stanbic IBTC Assets Management, Bunmi Dayo-Olagunju, urged market stakeholders to enlighten investors on the importance of investing in ETFs.
According to her, other ways at which we can enlighten the retail investor is by partnering with pension funds administrators. We did a research on internet penetration in Nigeria and a sizeable of younger generation are on the internet.
“We have derived various communications strategy to engage them on the importance of investing in ETFs. Hopefully, more people will take advantage and invest in the capital market.”
The managing director of APT Securities and Funds Limited, Mallam Garba Kurfi, noted that more education needs to be taken to retail investors especially investors at the grassroots.
“I deal primarily with retail investors, of which I have over 40,000, however not a single one of these investors have asked me to purchase an ETF since its inception,” he said.
“The Vetiva Industrial ETF recorded the largest price decline in 2016 of 20.51per cent when compared to ETFs in other sectors.
“On the flip side, the NSE’s NewGold ETF saw a sharp increase, as its value climbed 94.73per cent during the year, a clear indication of investor’s flight to safety sentiments,” the report explained.
An ETF is a type of fund that tracks the performance of an index, or a commodity. ETF is traded like shares on a stock exchange and derive their value from the index or commodity they track. ETFs provide investors the opportunity to diversify their portfolios without going through the rigours of selecting individual securities.
According to Leadership findings, the Exchange as at February 8, 2017 had nine ETFs that include Newgold ETF, Newgold Vetiva Griffin 30 ETF, Lotus Halal Equity ETF, Stanbic IBTC ETF 30, Vetiva Banking ETF, Vetiva Consumer Goods ETF, Vetiva Industrial ETF, Vetiva S & P Nigeria Sovereign Bond ETF and the newly listed SIAML Pension ETF 40.
However, SIAML Pension ETF 40 is made up of 40 stocks on the NSE in terms of capitalisation, liquidity and other Pension Commission (PENCOM) investment guidelines.
However, despite the growth in the numbers of ETF on NSE since its introduction on the NSE in December 2011, yet, it still struggles with market acceptance and participation.
The chief executive officer, NSE, Mr. Oscar Onyema, recently said, “The listing of SIAML Pension ETF 40 which marks our first listing in 2017, lends credence to our commitment to championing and advocating for growth of the ETF market in Nigeria. With diversified investor base, our market offers issuers and their products access to capital and visibility whilst delivering transparency and liquidity to investors.
“The ETF market in Nigeria was launched in December 2011 on the NSE with cross listing of Newgold ETF and we are have become the second largest and fastest growing ETF market in Africa boasting of additional eight indigenous ETFs with AUM totalling about N5.4 billion and over 200 per cent cumulative growth in turnover over the last four years; a feat we have all achieved, together through unwavering diligence and determination to grow this segment of our market.
“Although we are yet to attain our desired goals, the Exchange will continue to support the growth of ETF market through our dedicated Product team working with existing and potential issuers to expand product universe, promote liquidity and transparency on product structures through appointed liquidity providers who are obliged to provide bid and ask prices for defined percentage during trading session, and increase product awareness through our annual ETF seminars/workshops as well as publishing a wide range of educational resources on our website and different media platforms.
“It is against this backdrop that I wish to encourage fund managers to take advantage of available opportunities by partaking in and contributing to the growth of ETF market through product innovations that meets investors’ needs and appetite.
“I encourage investors to take advantage of the benefits presented by investing in ETFs such as lower cost, diversification and liquidity. I also urge fund issuers to continually make available educative promotional materials on ETFs that will help investors make informed decisions,” he said.
He said the Exchange would continue its collaboration with market stakeholders- Regulators, Dealing Member Firms, Fund Managers, Issuing Houses, among others to collectively promote increased awareness and education on ETFs amongst the investor community.
According to executive director, Stanbic IBTC Asset Management, Shuaib Audu, investors tend to prefer direct equities investment.
He noted that the low participation in ETFs could be addressed when the brokers are made to facilitate and actively engage in the issuance of ETFs.
He said the total trade on direct investment in the past year was a little under N1 trillion, a sharp contrast to N250 million quoted as the combined total value of ETF traded by issuers on the stock exchange.
He however applauded the NSE over what he called the right steps taken towards enhancing investors’ education to drive home the benefits of ETF participation.
Some of the benefits of ETFs as highlighted during the workshop were the enhancement of flexibility, transparency, investment diversification, liquidity and low cost.
Speaking at the listing of SIAML Pension ETF 40, Audu explained that investors can obtain a broad exposure to several securities in the NSE pension Index which spans across various sectors by investing in the Fund.
He noted that market stakeholders are working to drive domestic investors’ participation in ETFs market.
Also, the executive director, Stanbic IBTC Assets Management, Bunmi Dayo-Olagunju, urged market stakeholders to enlighten investors on the importance of investing in ETFs.
According to her, other ways at which we can enlighten the retail investor is by partnering with pension funds administrators. We did a research on internet penetration in Nigeria and a sizeable of younger generation are on the internet.
“We have derived various communications strategy to engage them on the importance of investing in ETFs. Hopefully, more people will take advantage and invest in the capital market.”
The managing director of APT Securities and Funds Limited, Mallam Garba Kurfi, noted that more education needs to be taken to retail investors especially investors at the grassroots.
“I deal primarily with retail investors, of which I have over 40,000, however not a single one of these investors have asked me to purchase an ETF since its inception,” he said.
Kurfi urged the regulatory bodies to deepen education from the masses by taking a cue from how the MMM Ponzi scheme gained popularity, citing that better funding for the education of ETF will further deepen its success rate.
