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Exchange Traded Funds Rise 1,900% to N4.24 Billion
By Goddy Egene
Exchange Traded Funds (ETFs) have soared to N4.24 billion as at September 2016, showing an increase of 1,900 per cent. ETFs were introduced in Nigeria to investors as new opportunities to diversify their portfolios and access the stock market.
Speaking yesterday at a workshop on ETFs in Lagos, the Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, said the exchange has recoded significant growth in ETFs.
“As at today, we have recorded about 1,900 per cent growth in our ETF market with total assets under management (AUM) of about N4.24 billion as at September 2016 on eight ETFs currently listed and traded on the exchange,” he said.
According to him, ETFs were introduced in December 2011 with cross listing of Newgold ETF with AUM of N287.5 million. He said currently, there are eight ETFs including: Newgold ETF, Vetiva Griffin 30 ETF, StanbicIBTC ETF 30, Lotus Halal Equity ETF, Vetiva Sector Series ETFs- Banking, Consumer Goods and Industrial, and Vetiva S&P Nigerian Sovereign Bond ETF.
“Investors now have the ability to quantify and evaluate the trade-offs in our markets, and are able to select the instrument that allows for the most efficient implementation of their desired strategy. There are currently about 506 investors holding ETFs but we are optimistic that the growth of ETFs in Nigeria have only just begun with support of market intermediaries, stakeholders and our regulator,” he said.
He noted that the existence of ETFs in the Nigerian market is beneficial to retail and institutional investors, as ETFs offer a direct and inexpensive way to attain diversified exposure to an index, commodity, sector, or region.
“Asides diversification and tradability, ETFs also offer additional benefits of low expense ratio as compared to mutual funds, increased liquidity and can be used to execute different investment strategies,” he said.
Onyema said as part of the exchange’s efforts to develop the ETF market, the workshop was organised to create awareness of the product, address its challenges and promote its opportunities in Nigeria and Africa.
“Through the course of the proceedings, our keynote speakers and distinguished team of panellists discussed ETF products in detail – how they are constructed and traded, why they may be attractive to investors and how they may be helpful in investment strategy. They also provided people with insight into indexing and the future of the ETF marketplace in Nigeria and Africa as a whole,” he said.
