Officials of the Nigerian Stock Exchange (NSE) and Meristem Wealth Management Limited, have identified Exchange Traded Funds (ETFs) as a viable investment option for investors, particularly younger players who are new to the capital market.
Speaking at a workshop organised by NSE in partnership with Meristem in Lagos, the Chief Exchange Officer of NSE, Mr. Oscar Onyema said with the market witnessing low yields, they have seen an increasing appetite for equities, and ETFs present investors with an alternative channel to maximize investment and minimize the risk that comes with investing in equities.
“Today, the NSE is the second largest ETF market in Africa with a current market capitalisation of N6.9 billion. From a single ETF tracking the price of Gold in 2011, the market has deepened with 10 ETFs currently offering exposure to equities, fixed income, commodities as well as thematic and smart investment solutions. The ETFs market segment is radically reshaping the asset-management industry; gradually eclipsing old-fashioned stock pickers given its ability to replicate passive investing styles.”
According to him, the exchange is resolute in its goal to collaborate with market stakeholders to not only increase listed ETFs but also provide the necessary sensitization and capacity building that will boost activity in the market.
Also speaking, Head, Asset Management, Meristem Wealth Management, Mr. Taiwo Yusuf, noted that ETFs are inherently designed to give investors access to a wide range of viable assets. “By investing in ETFs, investors are free from the rigours that come with trading in equities including stock valuation, screening, selection, and liquidity risk. This makes ETFs a more cost-effective investment solution. In addition, ETFs serve as a bespoke product for investors who want to add a tinge of innovation to their investment portfolios,” Yusuf said.