The Nigerian Exchange Limited (NGX) offers a comprehensive list of Mutual Funds to help you meet your savings and investment goals and priorities.
A Mutual Fund is an investment vehicle made up of a pool of funds collected from numerous investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual Funds are operated by professional fund managers, who invest the fund’s capital and attempt to produce capital gains and income for the investors.
One of the main advantages of Mutual Funds is they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities. Each shareholder, therefore, participates proportionally in the gain or loss of the fund.
Advantages/Benefits of Investing in Mutual Funds
- Diversification – Mutual Funds spread their holdings across various investment vehicles, reducing the effect any single security or class of securities has on the overall portfolio. Because mutual funds contain hundreds or thousands of securities, investors are less affected if one security underperforms.
- Professional Management – Mutual Fund accounts are managed by qualified professionals. These professionals invest only after careful analysis of the performance and prospects of different securities. It is a continuous process that takes time and expertise which will add value to your investment.
- Regulations – Mutual Funds are required to be registered with the Securities and Exchange Commission. They are obliged to follow strict regulations designed to protect investors.
- Affordability – As a small investor, you may find that it is not possible to buy shares of larger corporations. With Mutual Funds small investors can get started because of the minimal investment requirements.
- Liquidity – With open-end funds, you can redeem all or part of your investment any time you wish and receive the current value of the shares. Moreover, the process is standardized, making it swift and efficient.
- Transparency – As a unit holder, you are provided with regular updates, for example daily NAVs, bid and offer prices as well as information on the fund’s holdings and the fund manager’s strategy.