For instance, mutual funds have recorded impressive growth in the last five years, but the ratio of mutual fund assets to the GDP is about 0.5 per cent.
For this reason, underwriting companies are encouraging Nigerians to utilise its Money Market Fund (MMF), as a savings tool in navigating the current economic downturn intensified by the coronavirus pandemic.
According to them, the Money Market Fund is a large pool of funds that investors can invest in, including Treasury Bills, fixed deposits, and commercial papers.
Asides the funds being managed by a team of experienced professional asset managers, they said customers will also enjoy competitive returns on savings, can track daily interest with ease, have access to prompt liquidations without penalties, and can transact online and via Unstructured Supplementary Service Data (USSD).
Speaking with The Guardian the Chief Executive Officer, AXA Mansard Investments Limited, Deji Tunde-Anjous, said the objective of insurers with the MMF is to inculcate savings and investment culture among Nigerians.
He said: “As a nation, we are faced with many economic challenges, intensified further by the COVID-19 pandemic. Investments in the sector will bring expertise to bear in enabling people realise much more from their available resources by making the right savings and investment decisions.
“We are fully digital, empowering customers to access important savings and investment opportunities conveniently, also recently collaborated with Jumia-One, to create more value and expand accessibility for clientele.
Martins explained that they can decide to pull out and take whatever profit that is accruable at that point. Therefore, it is a good option for people saving up for a project, as the funds keep earning interest while they continue to save. Furthermore, you can use these assets as collateral in other deals involving cash or lending.
He said investors do not need to have N100 million to start investing in money market funds. With as little as N10,000, they can start enjoying the benefits of money market funds.
It’s also tailor-made for salary earners looking to stash away a portion of their earnings for a rainy day, or looking to hedge against higher inflation environments by strengthening their purchasing power.
Also speaking, the Executive Director, Marketing and Brand Operations, NICON Insurance, Debo Oladejo, told The Guardian on the telephone that professional managers that would handle these investments are skilled and experienced, and we will ensure effective management of the fund.
“There is no maximum limit on the amount to be invested. All you need to do is ensure that additional investments are not less than N1,000.
“The benefits of the GDL money market fund are enormous for all investor classes in the country, with the flexibility of the investment and higher-yielding interest rates than standard banks.”
But he urged the government to offer tax incentives to investors, who are committed to a regular investment plan in mutual funds. It could also create an enabling environment that will lead to job creation in Nigeria, to increase savings and investable funds.
“Regulators could promote innovative legislation to increase investment in mutual funds and expand investment channels to increase returns on the funds invested.
“The existence of a Trustee and Custodian to a mutual fund ensures the safety of investments. As the Trustee ensures that the fund is managed in line with approved investment guidelines, the Custodian holds the fund assets,” he said.