how to invest in nigerian mutual funds

Investing in Nigerian mutual funds can be overwhelming if you’re a new investor. There is an enormous amount of funds purchasable and they come with different asset groups and investment strategies. Also, investing in mutual funds is different from buying shares on the Nigeria stock exchange. However, it is easier than you might think.

To help you get started, we are going to walk you through the essential concepts that you should know before you become an investor in the Nigerian mutual fund.

How Mutual Funds Work in Nigeria

Mutual funds in Nigeria are investment companies that take money from numerous investors and invest it in an extensive number of securities such as stocks, bonds, treasury bills and assets. The goal of these bodies is to gain a return on investment and earn income while protecting your investment capital and that of other investors.

Who Operates a Mutual Fund?

The operations in mutual funds are carried out by qualified fund managers. These managers are generally responsible for mutual funds supervision, investment strategy implementation and management of portfolio. Many investors prefer mutual funds because their mind is at ease knowing that their money is handled by an expert –fund managers.

5 Best Mutual Funds Mutual Funds Managers in Nigeria

  1. ARM (Asset and Resources Management) Investment Managers
  2. Stanbic IBTC Asset Management Limited
  3. United Bank for Africa (UBA) Asset Management Limited
  4. Quantum Zenith Asset Management & Investment Limited (formerly Zenith Assets Management Limited)
  5. FBNQuest Asset Management (First Bank Capital Limited)

The above fund managers have several mutual funds that you can select from as listed below:

1. ARM Investment Managers

  • ARM Aggressive Growth Fund
  • ARM Discovery Fund
  • ARM Money Market Fund
  • ARM Ethical Fund

The initial investment amount of these mutual funds vary. They range from N5,000 to N50,000

2. Stanbic IBTC Asset Management Limited

  • SIBTC Nigerian Equity Fund (SINEF)
  • SIBTC Ethical Fund (SIEF)
  • SIBTC Balanced Fund (SIBAL)
  • SIBTC Guaranteed Investment Fund (SIGIF)
  • SIBTC Money Market Fund (SIMM)
  • SIBTC Bond Fund (SIBOND)
  • SIBTC Imaan Fund (SIMAAN)
  • SIBTC Dollar Fund (SIDF)

They all have a minimum investment amount of Naira 5,000 except SIDF which is $1,000

3. United Bank for Africa (UBA) Asset Management Limited

  • UBA Money Market Fund
  • UBA Balance Fund
  • UBA Equity Fund
  • UBA Bond Fund

4. Quantum Zenith Asset Management & Investment Limited

  • Money Market Fund
  • Income Fund
  • Equity Fund
  • Ethical Fund

They are all open-ended fund with the varying bid price.

5. FBNQuest Asset Management

  • FBN Money Market Fund
  • FBN Fixed Income Fund
  • FBN Balanced Fund
  • FBN Nigeria Eurobond (USD) Fund
  • FBN Nigeria Smart Beta Equity Fund

All have a minimum investment N50,000 except Money Market; which is N5,000 and Eurobond; which is USD 1,000.

7 Benefits of Investing in Nigerian Mutual Funds

  1. Professional Fund Handling: As an investor, you may not have the time carefully research, analyse and choose the right securities. Perhaps, you have a full-time job or business you run. By investing in mutual funds, your investment is managed by qualified fund managers. They do the background check, will only invest in reliable securities and supervise the performance.
  2. Multiple Investment Holdings: Mutual funds invest in multiple securities. This is referred to as diversification. The securities mutual funds hold could be hundreds –if not thousands.
  3. Risk Reduction: As a result of thousands of securities owned by Nigerian mutual funds, risk is largely reduced. If one security fails, others will make up for it.
  4. Affordable Investment Price: Mutual funds are cheap to buy. They basically have low minimum investments, which gives room for small investors.
  5. Liquidity: Another benefit of investing in Nigerian mutual funds is because of its high liquidity feature. You can easily get cash value from a mutual fund in a few days if you need money. This process is fast and effective because it is a systemised process.
  6. Low Expense: Individual securities that are actively managed by, for instance, stockbrokers, are more expensive to manage compared to mutual funds. Nigerian mutual funds are invariably cheaper than stock portfolios. You’ll discover this when you sum research cost, annual charges, transaction fees and other expenditure collected by brokerage firms.
  7. Transparency: As an investor, mutual funds will provide you with all the information you need to know. You can know the stocks, bonds, notes and other securities the mutual fund holds. In addition, you get regular reporting of the bid and offer prices, daily NAVs, etc. –even irrelevant information you won’t need.

What Do Nigerian Mutual Funds Do with Your Investment?

Mutual funds put your money in several investments. The most popular include stocks, corporate bonds and government bonds.

Actually, the type of fund you purchase determines what will be invested in. There are mainly 3 types.

  • Fixed-income funds: These are funds that are invested only in government or corporate bonds. Most investors like this type because it has very low risks and it is a guaranteed cash flow. However, the returns are not very high.
  • Equity funds: These are funds invested in common stock. Unlike fixed-income, they have very high returns but also comes with equivalent risk.
  • Balanced or Mixed Income funds are a blend of fixed-income and equity funds. So your money is invested in both stock and bonds. Their possible returns and likely risks lye between the fixed-income and equity funds.

The Difference between a Mutual Funds and a Stockbrokerage Firm

Mutual fund operators do not need your approval before buying or selling investments. They have the right to purchase an investment they know would bring the most profit. On the other hand, a stock brokerage firm will request for your consent before using their license to purchase or sell shares on the Nigerian stock market.

Mutual funds firm saves you the challenges of keeping tabs on the market value of shares, deciding what to invest in and still make money for you. But for a stock brokerage firm, you’ll have to be up-to-date on the market, and decide what shares to buy and when you want to sell.

How to Trade in Nigerian Mutual Funds

Below are the steps you should take to invest in the Nigerian mutual funds:

1. Hire a Mutual Funds Adviser

As a newbie, you may not be able to select the ideal investments and even track the several assets you acquire. In this case, getting a mutual fund adviser is a smart step to take and this is what many other new investors do.

A mutual fund adviser has a deeper and broader knowledge about mutual funds in Nigeria, focus their time on managing clients’ portfolio, saves you time and give you credible advice when you need it.

When hiring a mutual fund adviser, you want to go for a trustworthy professional. Consider how accessible the adviser is, his past track record, source(s) of income, competence, qualifications and experience.

2. Calculate Your Budget

Estimate the amount you are willing to invest in the mutual funds. The wise principle is your budget should be an amount that you can comfortably do without for 2 or 3 years to withstand any market downturns.

A factor you’ll have to put into consideration is your broker/ mutual funds firm. Some often require a minimum budget, to begin with, while others do not have a specified amount. Another factor is how much money you are willing to risk.

3. Build and Maintain Your Investment Portfolio

These two steps require sound investment strategies. One of these is the ‘buy and hold’ strategy –which is the most evangelised. You buy investments and hold them for a very long time, not minding the market fluctuation. Eventually, your profit goes up and outbalance the losses you may have accrued.

Another strategy is the market timing strategy which is about getting in and out of the markets at a perfect time. This requires a high level of being able to predict the market well. Another one is the wing-it strategy the tactical market allocation.

Find the most suitable for you and learn all there is to implement it.


When it comes to investing in Nigerian mutual funds, make sure you do your homework and put in a reasonable amount of effort into it. In a nutshell, there are several reasons why investing in Nigerian mutual funds is good and an adequate investigation of your potential investments can scale up your gains –and lower your risks.

Make Money As a Freelance Writer in Nigeria

By Abdullah Ajibose

Abdullah is the Team Lead at and Editor-in-Chief (If you find an error in any content, please spank him). He is a copywriter who currently prefers to proofread and edit other people's content and a student at the University near Lagos Lagoon.

Leave a Reply

Your email address will not be published. Required fields are marked *