The Nigerian Stock Exchange on Monday said the Assets Under Management of the eight listed Exchange Traded Fund stood at N4.26bn as at September, 2016.
The NSE Chief Executive Officer, Mr. Oscar Onyema, spoke at the ETF 2016 workshop organised by the bourse in partnership with Stanbic IBTC Asset Management, Lotus Capital and Vetiva Fund Managers Ltd. in Lagos.
He said, “Experts have predicted the continued growth of the ETF industry, estimating that global AUM will reach at least seven trillion dollars by 2021.” The NSE chief said that currently, there were about 506 ETF investors in the market. He, however, expressed optimism that “the growth of ETFs in Nigeria has only just begun with the support of market intermediaries, stakeholders and our regulator”. Onyema said that the existence of ETFs in the Nigeria market was beneficial to retail and institutional investors, as ETFs offer a direct and inexpensive way to attain diversified exposure to an index, commodity, sector or region. He said ETFs also offer additional benefits of low expense ratio compared to mutual funds, increased liquidity.
Onyema said that this could be used to execute different investment strategies asides from diversification and tradability. He further said that the workshop was organised to create awareness of the product, address its challenges and promote the opportunities in Nigeria and Africa. He said, “The Exchange remains committed to partnering with all market stakeholders, to continue to build and develop the Nigerian capital market, while offering a wide range of investment vehicles for all investors.” The Executive Director/Head, Sub-Saharan Africa Client Coverage Team, MSCI, Mr. Gareth Allison, said that ETF aids investors to diversify their diversification. Allison said that MSCI would aid the Exchange to develop and transform its ETF market.
He said, “We want to help investors to utilise opportunity in the market and make maximum return.” On the Fundamental of Market Indices, Allison said that investors need to understand the underlying assets before investing in any market. He said that indices were veryIMPORTANT in investment decision, and as well used as policy benchmark. He said, “Market is revolving, investors are revolving too, and we are faced with behavioural investors.”
In her comments, Ms. Nerina Visser, ETF Strategist and Advisor from South Africa, said that market regulators needed to know the type of ETFs to develop to ensure investors patronage. Visser said that market markers were needed to act as liquidity boosters for ETF to thrive in any market. She said that South Africa had the highest market for the product with 74 Exchange Traded Products across all asset classes. Visser added that market should come out with specific investors’ needs in the establishment of ETF. She also said that regulators should consider reducing trading fees for ETF to increase patronage.