THISDAY Model Portfolio, consisting of five different portfolio types constructed individually in conjunction with five leading stockbroking firms in the country with different investment objectives, has generated a total return of N6.3million, about 12.7 per cent on a combined hypothetical portfolio value of N50million deployed 12 weeks ago.
THISDAY Model Portfolio, an initiative of THISDAY Economic and Financial Intelligence Unit (TEFIU), is designed to enable leading stockbrokers and investment houses in the country share their trading skills and methodologies with ordinary investors.Â Â The investment houses involved in the project are Afrinvest Limited, FSDH Securities Limited, Capital Assets Limited, Meristem Limited and Lead Advisory Limited.
The project which began 12 weeks ago ( July 3, 2017) involved asking each of the partner stock broking houses in the country to construct a portfolio of 10 stocks selected according to their individual best judgement and using their best and well tested stock selection and investment strategies . They were then asked to each deploy an imaginary fund of N10million (ten million naira) to invest on the ten stocks in whatever proportions they considered best.
Analysis of the return indicates that portfolio C generated the highest return of N2.1million on the N10million deployed representing 21.7 per cent gain, almost doubling the average return rate of 12.7 per cent from all the five portfolios. Portfolio D generated the second highest return of N1(16.9%); followed by Portfolio B with a return of N1.2m (12.3%). Portfolio A came fourth with a return of N0.8m (8%) while Portfolio E generated N0.5m (5%) trailing behind all the other four.
What this means is that if each portfolio had actually deployed the N10million available to it, it would have generated the reported return on the investment.
According to the notes sent to TEFIU by the representative of the firm that constructed portfolio A, â€œThe portfolio is made up of majorly non-speculative counters which are projected to outperform general performance of the benchmark indexâ€. The firm also states: â€œdespite, the current weak appetite for equities, we believe these stocks will also benefit from any positive twist in sentiment and may lead to sporadic fantastic gains.â€
The note from the firm that constructed portfolio B indicates that â€œit is a diversified portfolio consisting of value and growth stocks in different sectors of the Nigerian economy in order to reduce the overall portfolio risk for the investors. The selected stocks have strong fundamentals and have history of good dividend payments. Therefore, the portfolio is an ideal investment for large institutional investors, high net-worth individual investors and any investors who desire regular cash flow and consistent investment appreciation.
According to the representative of the firm that constructed Portfolio D, â€˜The primary objective of this shadow portfolio type is the preservation of the capital and to also provide stable and moderate returns. The target individuals are investors with low risk appetite such as retirees, pensioners and institutional investors such as cooperatives, schemes, investment clubs and associationsâ€.
From the notes sent to TEFIU by the firm that constructed Portfolio E, â€˜this portfolio is created for a medium-long term investor with an horizon of 3-5 yearsÂ Â Â Â Â Â Â .
We have yet to receive the note from the firm that constructed Portfolio E on the objective(s) behind it.
According to Editor-at Large, THISDAY Newspapers, Ayo Arowolo, â€œThe whole idea is to begin to generate interest from the general public on the stock market when they see how carefully constructed combination of stocks from experienced fund managers can still generate moderate and consistent returnsâ€.
All the representatives of the partner stock broking firms expressed optimism the project has the capacity to re-awaken the lost interest in the stock market through this collaborative efforts.
Arowolo also stated that while the summaries of the performances by all the five portfolios would be reported weekly, detailed reports indicating the component of each portfolio and their individual performances will be done monthly.
Individual investors who are also interested in knowing more about the components of each portfolio and the investment firms matched with the portfolios they constructed should contact TEFIU as indicated in the table on the next page.