Last Updated: July, 2021
You Can't Start Making Money Investing in Mutual Funds Until You Understand What They Are
Before you can learn how to make money investing in mutual funds, you have to understand what a mutual fund is. I put together an extensive resource to help you understand this called "The New Investor's Guide to Mutual Fund Investing" (N3000). One of the articles in that series was called 'How a Mutual Fund Works'. To save you time, I'll give you the short version.
Basically, a mutual fund is a term used to describe a type of company that doesn't do anything itself, but rather it owns investments.
The company (the mutual fund) hires a portfolio manager and pays him or her a management fee, which often falls between 0.50% and 2.00% of assets. This portfolio manager invests the money raised by the fund according to the strategy laid out in a document called the prospectus.
Some mutual funds specialize in investing in stocks, some in bonds, some in real estate, some in gold. The list is practically endless. As I mentioned in Making Money Investing in Nigeria Stock Exchange Market , there are even funds designed for people who only want to own dividend stocks in the S&P 500 that have increased the dividend every year for the past 25 years!
It is safe to say that there is a mutual fund for almost any objective you may wish to achieve.
The Ways You Actually Make Money from Owning Mutual Find's
How you start making money when you invest in a mutual fund depends upon the type of fund you own.
If you own a stock fund, the biggest sources of potential profit are an increase in the stock price (capital gains) or cash dividends paid to you for your pro-rata share of the company's distributed profits.
If you own a stock fund, the biggest sources of potential profit are an increase in the stock price (capital gains) or cash dividends paid to you for your pro-rata share of the company's distributed profits.
If the fund instead focused on investing in bonds, you are making money through interest income.
If the fund specializes in investing in real estate, you might be making money from rents, property appreciation and profits from business operations, such as vending machines in an office building.
The Three Keys to Making Money Through Mutual Fund Investing
There are three major keys to making money through mutual fund investing. These are:
1. Keep expenses low.
The number one consideration when it comes to making money from mutual funds is keeping your costs low. This is the reason so many financial advisers tell their clients to invest in low cost index funds. These are often referred to as "dumb money" because they have no portfolio manager. Instead, they hold a basket of stocks with similar characteristics.
Why is that important? Because saving even 1% over an investing lifetime can lead to enormous wealth. If an 18 year old saved N50,000 per year, the difference between a 7% return and an 8% return over 50 years is N8,036,206. That is real money by anyone's standards!
The number one consideration when it comes to making money from mutual funds is keeping your costs low. This is the reason so many financial advisers tell their clients to invest in low cost index funds. These are often referred to as "dumb money" because they have no portfolio manager. Instead, they hold a basket of stocks with similar characteristics.
Why is that important? Because saving even 1% over an investing lifetime can lead to enormous wealth. If an 18 year old saved N50,000 per year, the difference between a 7% return and an 8% return over 50 years is N8,036,206. That is real money by anyone's standards!
2. Give yourself plenty of time to compound your wealth.
The longer you money stays invested, the more time you have to capture the power of compound interest.
The longer you money stays invested, the more time you have to capture the power of compound interest.
3. Don't invest in anything you don't understand.
The first rule of making money, as Warren Buffet has always quipped , is to never lose money. The second rule is to see rule #1. You should know exactly what each of your mutual funds owns and why you are invested in it.
The first rule of making money, as Warren Buffet has always quipped , is to never lose money. The second rule is to see rule #1. You should know exactly what each of your mutual funds owns and why you are invested in it.
Here are the top Mutual Fund Managers in the Nigeria in no particular order
Stanbic IBTC Asset Mgt. Limited
They operate several equity funds. They were awarded Best Mutual Fund Provider in 2015. Stanbic IBTC Asset Management is a wholly owned asset management subsidiary of Stanbic IBTC Holdings, a member of Standard Bank Group, the largest banking group in Africa. They offer numerous clients products and services, ranging from traditional assets (i.e. equities, fixed income securities and mutual funds) to alternative investment options such as unquoted equities and private equity opportunities. They manage the Stanbic IBTC Nigerian Equity Fund, Their flagship fund, as well as the Stanbic IBTC Ethical Fund, Stanbic IBTC Guaranteed Investment Fund, Stanbic IBTC Money Market Fund and Stanbic IBTC Bond Fund.
They operate several equity funds. They were awarded Best Mutual Fund Provider in 2015. Stanbic IBTC Asset Management is a wholly owned asset management subsidiary of Stanbic IBTC Holdings, a member of Standard Bank Group, the largest banking group in Africa. They offer numerous clients products and services, ranging from traditional assets (i.e. equities, fixed income securities and mutual funds) to alternative investment options such as unquoted equities and private equity opportunities. They manage the Stanbic IBTC Nigerian Equity Fund, Their flagship fund, as well as the Stanbic IBTC Ethical Fund, Stanbic IBTC Guaranteed Investment Fund, Stanbic IBTC Money Market Fund and Stanbic IBTC Bond Fund.
FBN Capital Limited
First Bank Nigeria Capital Market. They provide strategic advice, arrange finance, administer assets, manage funds, sell investment.
First Bank Nigeria Capital Market. They provide strategic advice, arrange finance, administer assets, manage funds, sell investment.
Asset & Resources Mgt. Co. Ltd
Asset & Resource Management Company is Nigeria’s largest independent non-bank financial institution with over 20 years of experience in asset management. The ARM Group offers a variety of products to its retail clients including mutual funds, real estate, life insurance, pension administration and stockbroking services.
ARM has an AA- rating by Agusto & Co, (the highest rating for an asset management firm in Nigeria) and was named the Best Fund Manager in Nigeria in 2013 by Capital Finance International.
They offer
ARM Aggressive Growth Fund
ARM Discovery Fund
ARM Ethical Fund
ARM Money Market Fund
Asset & Resource Management Company is Nigeria’s largest independent non-bank financial institution with over 20 years of experience in asset management. The ARM Group offers a variety of products to its retail clients including mutual funds, real estate, life insurance, pension administration and stockbroking services.
ARM has an AA- rating by Agusto & Co, (the highest rating for an asset management firm in Nigeria) and was named the Best Fund Manager in Nigeria in 2013 by Capital Finance International.
They offer
ARM Aggressive Growth Fund
ARM Discovery Fund
ARM Ethical Fund
ARM Money Market Fund
Alternative Cap. Partners Ltd
They operate an equity fund called ACAP Canary Growth Fund. The ACAP CanaryGrowth Fund (“The Fund”) is a Securities and Exchange Commission (“SEC”) registered collective investment scheme listed on the Nigerian Stock Exchange Memorandum Quotation. The Fund is open to strategic investors- High Net worth Individuals, Pension Fund Administrators, Insurance Companies, Mortgage and Microfinance Banks, Endowment Funds, Family & Trust Funds, Educational centres, Charity Organisations, Religious Houses, Company Co-operatives & Staff Schemes and Federal, State & Local Governments including their Investment companies. Minimum Subscription is 50,000 units and 10,000 units thereafter.
They operate an equity fund called ACAP Canary Growth Fund. The ACAP CanaryGrowth Fund (“The Fund”) is a Securities and Exchange Commission (“SEC”) registered collective investment scheme listed on the Nigerian Stock Exchange Memorandum Quotation. The Fund is open to strategic investors- High Net worth Individuals, Pension Fund Administrators, Insurance Companies, Mortgage and Microfinance Banks, Endowment Funds, Family & Trust Funds, Educational centres, Charity Organisations, Religious Houses, Company Co-operatives & Staff Schemes and Federal, State & Local Governments including their Investment companies. Minimum Subscription is 50,000 units and 10,000 units thereafter.
UBA Asset Management Limited
The UBA Mutual Fund is authorized and registered in Nigeria as a Unit Trust Scheme under Section 125 of the Investment Securities Act (ISA). It is an open ended fund. There is free entry and free exit Subscription.
They offer
UBA Balanced Fund
UBA Bond Fund
UBA Equity Fund
UBA Money Market Fund
The UBA Mutual Fund is authorized and registered in Nigeria as a Unit Trust Scheme under Section 125 of the Investment Securities Act (ISA). It is an open ended fund. There is free entry and free exit Subscription.
They offer
UBA Balanced Fund
UBA Bond Fund
UBA Equity Fund
UBA Money Market Fund
Investment One
Investment One is one of the fastest growing Financial Services firms in Nigeria. Following the Central Bank of Nigeria initiated reforms in the banking industry, There erstwhile parent company; Guaranty Trust Bank Plc divested its shareholding in the company. The company was acquired by select investors, management and staff of Investment One.
Founded in 2007, Investment One (then GTB Asset Management Limited) commenced business in 2008. They provide Investment Management, Trust Services, Financial Advisory Services and through there subsidiaries provide Securities Brokerage, Fund Management and Pensions Services to individuals, corporate institutions, state governments and government agencies and parastatals
They offer
Nigerian International Growth Fund (NIGFUND)
Kakawa Guaranteed Income Fund (KGIF)
myPASS (my Project Aimed Savings)
Child Trust
Guaranteed Investment Saving (GIS)
Investment One is one of the fastest growing Financial Services firms in Nigeria. Following the Central Bank of Nigeria initiated reforms in the banking industry, There erstwhile parent company; Guaranty Trust Bank Plc divested its shareholding in the company. The company was acquired by select investors, management and staff of Investment One.
Founded in 2007, Investment One (then GTB Asset Management Limited) commenced business in 2008. They provide Investment Management, Trust Services, Financial Advisory Services and through there subsidiaries provide Securities Brokerage, Fund Management and Pensions Services to individuals, corporate institutions, state governments and government agencies and parastatals
They offer
Nigerian International Growth Fund (NIGFUND)
Kakawa Guaranteed Income Fund (KGIF)
myPASS (my Project Aimed Savings)
Child Trust
Guaranteed Investment Saving (GIS)
Chapel Hill
Chapel Hill was ranked the “Best Investment Bank in Nigeria” and “Best Debt House in Nigeria” for the last year. The firm provides comprehensive advisory services to a diverse client base which includes financial institutions, major corporations, individual and institutional investors and government agencies. Our transaction experience spans across several sectors including banking, insurance, real estate, manufacturing, telecommunications, oil & gas, aviation and the public sector.
Sterling Capital Market Limited
They offer an equity fund called Frontier Fund. The Frontier Fund is a balanced, open- ended unit trust scheme incorporated on 18th March 2004. It has a primary objective of achieving long-term capital appreciation as well as return a competitive income to its Unit holders by investing in carefully selected money and capital market instruments, with the aid of highly seasoned professional fund managers.
They offer an equity fund called Frontier Fund. The Frontier Fund is a balanced, open- ended unit trust scheme incorporated on 18th March 2004. It has a primary objective of achieving long-term capital appreciation as well as return a competitive income to its Unit holders by investing in carefully selected money and capital market instruments, with the aid of highly seasoned professional fund managers.
By Tochukwu Dillion.
Contributor: Joshua Kennon.
Contributor: Joshua Kennon.
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