By InvestAdvocate
Lagos (INVESTADVOCATE)-The Nigerian Stock Exchange (NSE) on Monday reported its Exchange Traded Funds (ETFs) introduced December 2011 has grown 1,900 percent with Assets Under Management (AUM) hitting N4.24 billion, this is on dampened investors’ appetite towards investment in stocks.
Oscar Onyema, chief executive officer (CEO) of the NSE said the NSE’s ETFs is one of the fastest world’s growing since December 2011 it was introduced to September 2016, making this disclosure at the Exchange Traded Funds (ETFs) Workshop 2016 which the NSE organised at the Stock Exchange House in Lagos Nigeria.
“Investors now have the ability to quantify and evaluate the trade-offs in our markets, and are able to select the instrument that allows for the most efficient implementation of their desired strategy,” he said.
According to him, global ETF AUM have grown 102 percent to $3 trillion as at April 2016 from $1.4 trillion in December 2010. He added that experts have predicted a continuous growth in ETFs which is projected to hit about S$7 trillion by 2021.
Onyema said that there are currently about 506 investors holding ETFs but optimistic that the growth of ETFs in Nigeria have only just begun with support of market intermediaries, stakeholders and regulator. “The existence of ETFs in our market is 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 affirmed.
Eight ETFs are currently listed and traded on the NSE. They include Newgold ETF, Vetiva Griffin 30 ETF, Stanbic IBTC ETF 30, Lotus Halal Equity ETF, Vetiva Sector Series ETFs- Banking, Consumer Goods and Industrial, and Vetiva S&P Nigerian Sovereign Bond ETF, A breakdown of these shows six (6) backed by equities, one (1) local bond and commodity ETFs respectively.
He says apart from diversification and tradability, ETFs also offer additional benefits of low expense ratio as compared to mutual funds, increased liquidity and can be used to execute different investment strategies. Onyema disclosed that the history of ETFs dates back to 1990, when the Toronto Index Participation Fund (TIP 35) was launched in Canada. Since then, ETFs have gained widespread acceptance in most developed markets with demand from global retail and institutional investors leading to a variety of offerings by ETF sponsors.
The NSE CEO noted that in the NSE, ETFs introduced in December 2011 with cross listing of Newgold ETF with AUM of N287.5 million to provide investors’ with new opportunities to diversify their portfolios and access the market.
According to him, the workshop is part of the NSE’s effort to develop the ETF market, create awareness, address its challenges and promote its opportunities in Nigeria and Africa.
“By participating in this workshop, you will gain in-depth understanding of ETFs and Indices and learn how it can potentially benefit issuers and investors. I urge intermediaries in the Nigerian market to take from here lessons on how to replicate the global ETF industry success in Nigeria through product innovation and enhanced service delivery to investors. Every opportunity to improve knowledge and strengthen the market such as this workshop should be fully put to good use,” he added.
