1. Minimum amount required is N50,000
2. Minimum permissible holding after partial redemption is N25,000
3. Minimum of 90% of the fund’s assets will be invested in mid- to large-cap companies
4. The Fund will have between 15 to 25 holdings at any time and will not invest more than 10% of its assets in any one company.
5. At the manager’s discretion, up to 20% of the Fund’s assets may be in cash, cash equivalents, or high quality debt instruments
6. Designed for investors who have a long-term investment perspective
7. Initial cost of establishing the Fund will be charged against the expected proceeds
8. Administrative costs will not exceed 5%
9. Some interesting tid-bits about the expenses:
10. Trustees will be paid 0.05% of the NAV of the fund
11. The Manager will be entitled to 1.5% of the NAV of the fund
12. The Manager will also be entitled to an incentive fee not exceeding 30% of the total returns in excess of 10% of the fund’s NAV per annum

In recent years, there has been a significant increase in the number of mutual funds in Nigeria. ARM and IBTC were the pioneers in the mutual funds industry in Nigeria. My research shows that these two firms displayed the highest level of professionalism. They replied to emails promptly and provided the very detailed information on the requirements to invest in the stocks.

The report below provides the basic information on the available funds – their contact information, minimum required to invest in the mutual funds, the investment distribution. There was very little information available on 2 of the funds, First Bank’s Heritage Fund and Skye Bank’s Shelter Fund. A lot of information was sourced from the fund managers’ websites, online forums, and email exchanges with the companies.

My research shows that the mutual funds industry in Nigeria is still in its infancy and this is displayed by the lack of basic information about most of the funds (by their managers) and the lack of professionalism.

The ARM Discovery Fund had the lowest amount required to invest in it (N10,000). The average minimum required to invest in most of the other funds was N50,000. A lot of the funds did not provide any information on their management fees. ARM charges a management fee of 1.5% while Kakawa does not charge any first line management fee. However, Kakawa gets 50% of the excess return over the guaranteed investment rate.

READ/DOWNLOAD THE REPORT HERE: [Download not found]

One of my main concerns is the lack of any form of regulation on these mutual funds. There is no way to track their performance, the companies they have holdings in, their management fee and administration. These are very important factors to determining the ratings for the mutual funds.

ZENITH Bank Plc is set to raise N8 billion from the capital market through an offer for subscription to three mutual funds, which opens on Monday, May 5.

On offer for subscription are 500,000,000 units of the Zenith Equity Fund, 200,000,000 units of the Zenith Income Fund and 100,000,000 units of the Zenith Ethical Fund at N10 per unit. The funds are to be managed by Zenith Capital, the investment banking arm of Zenith Bank Plc.

The funds have distinct features aimed at investors with varying risk preferences and investment considerations and are open ended, meaning there is no limit to the amount that can be invested either during or after the offer.

The Zenith Equity Fund is designed to provide long term capital appreciation from diversified portfolio in quoted equities and debt instruments and is targeted at investors who desire aggressive growth and are not averse to high risk.

The Zenith Income Fund, designed for investors seeking average return in secure investments, will invest 70 per cent of its fund in assets such as government securities, corporate bonds, and commercial bills while 30 per cent will be invested in equities.

The Zenith Ethical Fund is designed for those who seek long-term capital growth through investment in equities but who have strong ethical considerations.

When it opens, investors will be free to subscribe to units of the fund through Zenith Bank Plc or any other approved agent by the fund manager from time to time after the IPO. Minimum investible amount in the fund during and after the offer is N100, 000.00

The Zenith Funds, like all other open-ended funds, are very liquid as investors have direct recourse to the fund manager in order to realise the prevailing value of their investments. The funds, which will enjoy economies of scale, will be diversified across several sectors and securities, therefore ensuring reduced volatility in each portfolio.

All three funds serve as useful investing tools that can be used to create a regular savings plan.

In order to monitor their investments in the Zenith Funds, investors will have online access to their statements of accounts through the manager’s website. Investors can also purchase and redeem units in any of the funds at any of Zenith Bank’s branches nationwide.