Talking Mutual Funds

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Simpa Adaba_

The process of wealth management is like tending a beautiful garden- you need to start with good soil and a good set of tools. Just as good soil has the proper fertility to nourish a plant, having the right foundation in financial literacy should empower you to potentially cultivate a successful investment portfolio.

Today, investing in Mutual funds is one of the best methods to build and manage wealth. Mutual funds often referred to as either collective investment schemes, unit trusts or funds, is a financial vehicle that allows various investors pool money together. It is usually managed by a team of investment professionals to create a greater buying power which in turn allows investors the opportunity to invest in a wider range of funds than would have been possible for individual investors.

Mutual Funds serve all types of investors with diverse portfolios. Depending on an investor’s need and priorities, there are many types of Mutual Funds but most prominent are four main categories – Equity (Stock) Funds, Bond (Fixed income) Funds, Money Market Funds and Hybrid Funds.

Equity or Stock Fund is a Mutual Fund that invests principally in stocks. In most cases, it focuses on a investment strategy; such as growth, value, large caps and small caps or themes such as property, energy and health care. The stock fund is in many ways ideal for investors with relatively little capital and people with little financial know-how.

On the other hand, Money Market Fund is a type of open-ended Mutual Fund that allows for short-term investments in debt securities such as Treasury Bills, Commercial Papers and Certificates of Deposit. It is often regarded as one of the safest and most stable securities available, and it is suitable for investors seeking short term investment.

Amongst the several benefits accrued to Mutual Funds investors, there are three key ones:
a) Investors’ portfolios are exposed to a low level of volatility as investment risk is spread across many securities, b) Investors enjoy professional management. because the Funds are managed by financial experts with years of experience, so investors are almost certain that their investments are properly managed. c) Mutual Funds that are open-ended and priced daily are very liquid and can be redeemed promptly at the prevailing price of the Fund.

In as much as Mutual Funds are one of the safest investment options, we also acknowledge the risk. It is important that any individual looking to invest in Mutual Funds is aware of some of these factors. The Fund is affected by market movements. This means that the price may fluctuate in response to volatility in the market which invariably affects the component investments or underlying assets in the Fund

At Standard Chartered Bank, with as little as $100 for the Retail Savings Plan and $1,000 for the lump sum investment, investors can buy Funds which invest in the equities and bond markets around the world.

  • Simpa Adaba is the Head of Wealth Management at Standard Chartered Bank Nigeria Ltd