NSE’s traded funds hit N4bn in assets

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From Joseph Amah, Lagos

The Nigerian Stock Exchange (NSE) has said that its Exchange Traded Funds (ETF) market now has total Assets Under Management (AUM) of over N4.24 billion. An Exchange Traded Fund (ETF) is a financial security that tracks an index, either in the form of a commodity or a basket of assets, but trades like normal shares on a stock exchange. The Chief Executive Officer of the Nigerian Stock Exchange, Mr. Oscar Onyema who disclosed this yesterday at the opening of the 2016 annual NSE Exchange Traded Funds Workshop held in Lagos, said the NSE’s ETFs were introduced in December 2011 with cross listing of Newgold ETF with AUM of N287.5 million to provide investors with new opportunities to diversify their portfolios and access the market. “As at today, we’ve recorded about 1,900% growth in our ETF market with total AUM of about N4.24 billion as at September 2016 on eight ETFs currently listed and traded on the Exchange – Newgold ETF, Vetiva Griffin 30 ETF, Stanbic IBTC ETF 30, Lotus Halal Equity ETF, Vetiva Sector Series ETFs- Banking, Consumer Goods and Industrial, Vetiva S&P and Nigerian Sovereign Bond ETF (6 equity backed, 1 commodity ETF and 1 bond ETF),” he said. The NSE chief executive said that ETFs have become a huge success story, as Global ETF Assets Under Management (AUM) have grown from $1.4 trillion in December 2010 to about $3trillion as at April, 2016 representing over 102 per cent cumulative growth over the last five years. He said Experts have predicted the continued growth of the ETF industry estimating that global AUM will reach at least $7 trillion by 2021. In his words: “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 has only just begun with support of market intermediaries, stakeholders and our regulator.” He noted that the existence of ETFs in the 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. The NSE boss added that as part of the Exchange’s efforts to develop the ETF market, the workshop has been organised to create awareness of the product, address its challenges and promote its opportunities in Nigeria and Africa. Also speaking, the Executive Director, Capital Markets, NSE, Mr. Haruna Jalo-Waziri, said:  “The Workshop emphasizes the Exchange’s drive towards developing and promoting Exchange Traded Products (ETPs). It will provide our intermediaries with necessary exposure and skills as it relates to ETFs product sales.” Head, Secondary Market, NSE, Mr. Dipo Omotoso, said the NSE ETF Workshop is very important because it is aimed at deepening the knowledge of key stakeholders on investing in ETFs. The workshop was organized by the NSE in partnership with the Exchange Traded Funds (ETFs) Issuers, Vetiva Fund Managers Limited, Lotus Capital Limited and Stanbic IBTC Asset Management.

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