By Obinna Chima
The Association of Assets Custodians of Nigeria (AASC) has stressed the need for an increased awareness on investment in mutual funds, so as to encourage more participation in the capital market.
President of the association, Mr. Segun Sanni, who spoke in a chat with THISDAY, argued that publicising the activities of mutual fund managers in the country would enhance capital formation in the economy.
Sanni, who is also the Head, Investor Services, Stanbic IBTC Bank Plc, said: “I think the responsibility is on the Securities and Exchange Commission (SEC) and actually all of us in the market to encourage and publicise that segment of the market called the mutual funds so that we will not just building capital formation in the urban centres alone, but to make sure it spreads across the country.”
Similarly, the Vice President of AASC, Mrs. Kemi Adewole, identified lack of awareness as a factor inhibiting the growth of mutual funds in the country.
Adewole, who is also the Vice President/Head Securities and Fund Services, Global Transaction Services, Citibank Nigeria explained: “Once people are able to make the distinction and are assured that the necessary controls have been put in place by the regulatory bodies, I believe we will see an increased interest in mutual funds. To encourage mutual funds investment, I believe all parties to the funds should create awareness and highlight the advantages of investing in Mutual funds.
“Apart from instant asset diversification, a key advantage of investing in mutual funds is the fact that when one is buying a mutual fund, you are choosing a professional money manager who will use the money to trade in carefully researched stocks. This means that, rather than having to research every investment before investing, you have a mutual fund's money manager to handle it for you.”
Continuing, the AASC President stressed that the market is for long term investment.
“The most important thing is that we need to deepen this market and make sure that it is not a market for speculators. If a market is a fertile ground for speculators, then such a market will be exposed to a lot of volatilities. Of course, some amount of volatility is expected in any market, but volatility that is not structured and based on speculation, is not sustainable.
“One of the things that have been discussed is to ensure that the retail investors coming into the market are encouraged to come in through Fund Managers, instead of just coming in to take investment decisions by themselves. When you come into the market through professional asset managers, you know that your decision is being taken in structured manner and you also have the advantage of enjoying the opportunity of pooling assets together,” he added.