Published On: Mon, Aug 1st, 2016

Saving alternatives that give you higher returns

A lot of people are searching for a safe haven where they could keep their money and at the same time get better interest from it. Due to ignorance or lack of adequate information, they lodge it into their savings account, where they get a paltry less than four per cent interest on their savings per annum. However, there are financial products which you could buy into which will safely keep your money and at the same time give you good returns on your investment. One of such financial products is mutual funds. Ironically, many know very little about it.
Mutual funds is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund’s capital and attempt to produce capital gains and income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.

Financial Products Business Hallmark  Monday, August 1
One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund. Mutual fund units, or shares, are issued and can typically be purchased or redeemed as needed at the fund’s current net asset value (NAV) per share, which is sometimes expressed as NAVPS.
There are arrays of credible mutual funds in Nigeria among which you could leverage on as they are sure to not only help save your hard earned money, but also give you interest that you would hardly get from any commercial lender. So we shall be reviewing some of them.
FBN FIXED INCOME FUND
The FBN Fixed Income Fund is a platform that allows you to fully exploit the potential of Nigerian debt securities. It is a The FBN Fixed Income Fund is an open-ended mutual fund that invests in a broad range of long tenured debt securities issued by the Federal Government of Nigeria, state governments and highly rated corporate institutions.
The fund may also invest in short-term, high quality money market securities. It is aimed at preserving and maximising return on capital while maintaining a high degree of liquidity by investing in a diversified portfolio of long tenured debt securities and short-term, high quality money market securities issued in Nigeria.
The fund is most suitable for medium or long term cash investments and offers a stable income through the distribution of a semi-annual dividend.
Asset Allocation Ranges
FGB Bonds 10 – 35%
State government bonds 10 – 50%
Corporate Bonds 25 – 45%
Eurobonds 0 – 15%
Money Market Securities 25 – 50%
FBN Fixed Income Fund is invested treasury bills, bank tenured deposits and commercial papers. Its risk is low. It is ideal for people who are saving for a short-to-medium term goal.
With as little as N5,000, you can key into the FBN Fixed Income Fund. And withholding tax is not charged on the capital gains of this fund. It has a minimum holding period of 30 days. However, units redeemed earlier than the minimum holding period will incur a processing fee of 20% on the income earned on the value of such redemptions. The income is usually distributed on quarterly basis.
ARM Mutual funds
ARM Mutual Funds is a good choice for small and big investors who want high capital growth over the long term to meet various objectives such as paying for education, buying a property or leaving a legacy for loved ones. It offers you the opportunity to grow your wealth over the long term with returns above inflation and earn multiple returns through capital appreciation and dividends.
It is an open-ended fund, which means that you can enter or exit the Fund whenever you wish. A larger portion of the fund of between 40 per cent and 65 per cent is invested in equities, 15%-30% in fixed income securities, 15%-30% in real estate and 1%-10% are given as loans.
According to the managers of the ARM Discovery Fund, “Proportion of the Fund invested in each of the asset classes will vary within the ranges provided as the market environment changes, and their potential risk and return change. However, the proportion will always remain within the ranges above.”
Equity and real estate provide superior long-term protection against inflation. The high risk of equities and real estate is lowered by also investing in fixed income securities and cash, which provide a fairly predictable income stream and easy access to your money.
With as low as N10,000, which is the minimum initial investment for the fund, you can invest in ARM Discovery Fund. And could also make a minimum additional investment of N5,000. And the risk level of the fund is moderate.
More Facts
Inception Date- The ARM Discovery Fund was started in 2002.
Previous Name – Equity Growth Fund (EGF) which was established in January 1995. The name of the Fund was changed to ARM Discovery Fund in 2002
Listing – Memorandum listing on the Nigerian Stock Exchange in April 2002
Management Type – The Fund is managed on a discretionary basis, which simply means that the fund manager can take decisions to buy and sell assets without referring to the clients for every transaction.
Management Fees: 1.5% of Net Asset Value (NAV) of the Fund
Fund Manager – ARM Investment Managers
Trustee – First Trustee (a subsidiary of First Bank of Nigeria Plc)
Registrar – First Registrars (a subsidiary of First Bank of Nigeria Plc)
Custodian- Citibank Nigeria Limited Investment Tracking – Access to investment account online
Payment Options – Online Payment is available via the online portal and you can set up a standing instruction with your bank for periodic payments.
NIGFUND
The Nigerian International Growth Fund (NIGFUND) is a diversified and balanced fund designed to maximise long term capital growth and maintain regular income distribution.
This Fund which is categorized as a Balanced Mutual Fund, is managed by Investment One Funds Management Limited (A subsidiary of Investment One Financial Services Limited) and is invested in Equities, Fixed Income, Money Market and Real Estate.
You are allowed to invest in a 10,000 Units (at the prevailing offer price). And the end of financial year of this fund is June. First Trustees Nigeria Limited and Stanbic IBTC Custodians are the Fund Trustees and Fund Custodian respectively for the NIGFUND.
Benefits
This fund is an open -ended fund, it allows unit holders ease of entry and exit. It could also be used as a collateral for loan from a commercial lender. This is room for partial redemption of unit holding is permitted and takes less than 5 working days.
You can now use a mutual fund that suits your saving plans and give you a better returns on your investment without any fear of losing your money. ARM Mutual funds ARM Mutual Funds is a good choice for small and big investors who want high capital growth over the long term to meet various objectives such as paying for education, buying a property or leaving a legacy for loved ones.
It offers you the opportunity to grow your wealth over the long term with returns above inflation and earn multiple returns through capital appreciation and dividends.
It is an open-ended fund, which means that you can enter or exit the Fund whenever you wish. A larger portion of the fund of between 40 per cent and 65 per cent is invested in equities, 15%-30% in fixed income securities, 15%-30% in real estate and 1%-10% are given as loans.
According to the managers of the ARM Discovery Fund,

“Proportion of the Fund invested in each of the asset classes will vary within the ranges provided as the market environment changes, and their potential risk and return change. However, the proportion will always remain within the ranges above.”

Equity and real estate provide superior long-term protection against inflation. The high risk of equities and real estate is lowered by also investing in fixed income securities and cash, which provide a fairly predictable income stream and easy access to your money.
With as low as N10,000, which is the minimum initial investment for the fund, you can invest in ARM Discovery Fund. And could also make a minimum additional investment of N5,000. And the risk level of the fund is moderate.

 

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