A Guide To Index Fund Investing In Nigeria

Index funds are a type of mutual fund or exchange-traded fund (ETF) that offers investors a way to track the performance of a particular market index, such as the S&P 500 or Nasdaq Composite. In Nigeria, index funds are listed on the NGX Indices and traded on the Nigerian Stock Exchange, providing investors with access to a range of asset classes and investment strategies. While index funds are not as popular in Nigeria as in other countries, there are a few notable options available, such as the Stanbic IBTC ETF 30 and the Vetiva Griffin 30 ETF. These funds aim to replicate the performance of the Nigerian Stock Exchange 30 Index and offer investors diversification, cost efficiency, and flexibility. When considering how to invest in index funds in Nigeria, it is important to evaluate the funds' characteristics, benefits, and risks to determine if they align with your investment goals and risk tolerance.

The Stanbic IBTC ETF 30

Units of the Stanbic IBTC ETF 30 can be purchased and sold directly on the floor of the NGX through a stockbroker. If units are not available for sale or there is no willing seller on the floor, clients can request the creation or redemption of units by contacting Stanbic IBTC Stockbrokers Limited (SISL) or the Fund Manager via email.

Benefits of the Stanbic IBTC ETF 30:

• Diversification: The fund reduces investment risks by investing across a diverse range of assets, avoiding concentration risk.
• Cost Efficiency: The fund incurs lower management and administrative costs compared to other investment options.
• Flexibility: Investors can subscribe to any investment of their choice.
• Security: The Stanbic IBTC ETF 30 is considered a safe, long-term investment.

The Nigerian Stock Exchange (NSE) is the leading Exchange Traded Fund market in West Africa, offering a trading platform that delivers liquidity, transparency, speed, and efficiency. Exchange-Traded Funds (ETFs) listed on the NSE provide investors with opportunities to diversify their investments across various asset classes and gain exposure to a broader market and different investment strategies.

The Nigerian Stock Exchange

The NSE Exchange Trade Funds allow investors to diversify their investments across various asset classes and gain exposure to a broader market and different investment strategies, such as local fixed income, local equities, international markets, commodities, and currency. With the Nigerian Stock Exchange ETFs, investors can track specific indices, including global, country-specific, and asset-specific indices.

The NSE Exchange Traded Fund is ideal for investors seeking optimal returns at a minimal cost, efficient access to other markets and asset classes, and those who want to diversify their assets through a single security.

To buy and sell Exchange-Traded Products on the Nigerian Stock Exchange, investors can go through their stockbroker.

Vetiva Griffin 30 ETF

The Vetiva Griffin 30 ETF is an open-ended fund designed to replicate the Nigerian Stock Exchange (NSE) 30 Index in terms of price and yield performance. The NSE 30 Index is made up of the top 30 companies listed on the Nigerian Stock Exchange in terms of market capitalization and liquidity. By investing in the Vetiva Griffin 30 ETF, investors are exposed to the securities of these top 30 companies, allowing them to benefit from the performance of this index.

Benefits of the Vetiva Griffin 30 ETF

Broad Market Exposure: Vetiva Griffin offers investors access to a diverse range of asset classes in the Nigerian market.

Access to the Advisory Team: Investors in the Vetiva Griffin ETF have access to a well-experienced advisory team with a successful track record in managing investment portfolios across various asset classes and market cycles.

Optimal Benefits: The Vetiva Griffin 30 ETF provides maximum benefits for investors, whether they hold a single security or multiple securities.

Cost-Effectiveness: The large size of the fund helps to reduce transaction costs, which can enhance overall portfolio returns.

How to Invest in Index Funds in Nigeria

Index funds are a type of mutual fund or exchange-traded fund (ETF) that tracks a specific financial market index, such as the NSE 30 Index. They are considered safe and ideal investment for long-term investors. Index funds have low operating expenses because they are passively managed, and they provide broad market exposure by investing in a variety of asset classes.

When investing in index funds in Nigeria, it is important to consider the performance and gains of each index. While index funds in Nigeria may not be as stable as their international counterparts, there are still some good options that provide consistent returns.

• Diversification: Invest in a diverse range of assets to reduce investment risks.
• Cost efficiency: Choose index funds with lower management and administrative costs.
• Flexibility: Look for funds that allow you to subscribe to a range of investment options.
• Security: Opt for index funds that are considered safe for long-term investments.

NGX Oil and Gas

Index funds are a type of mutual fund or exchange-traded fund. They are considered safe and are ideal for long-term investments. They are also a good option for those who don't have the time to actively monitor the market.

Index funds are listed on the NGX Indices and traded on the Nigerian Stock Exchange just like any other stock. The NGX Oil and Gas Index has been the highest-performing index fund in Nigeria so far this year, with a yield of 59.6%. It comprises the most capitalised and liquid companies in oil and gas marketing.

• Oando
• Okomu Oil
• Total
• Conoil
• MRS
• Seplat
• Ardova
• 11Plc
• Japaul Gold
• Transcorp

The NGX Oil and Gas Index started the year at 226.41 Naira and climbed to 361.30 Naira as of 23 September 2021. This impressive performance is a result of the index fund's ability to capture the performance of the oil and gas sector, which has been experiencing strong growth.

The Nigerian Stock Exchange offers a trading platform that delivers liquidity, transparency, speed, and efficiency. It is regulated by the Nigerian Securities and Exchange Commission and is a member of the World Federation of Exchanges.

NGX Afrinvest Div Yield Index

Index funds are a type of mutual fund or exchange-traded fund (ETF) that tracks the performance of a particular financial market index. They are considered safe and ideal for long-term investments. In Nigeria, they are listed on the NGX Indices and traded on the Nigerian Stock Exchange just like any other stock.

The NGX Afrinvest Div Yield Index is a unique index fund designed by Afrinvest to track and capture the stock market value of 12 high-performing stocks. It comprises stocks from the financial services, oil and gas, industrial, and manufacturing sectors.

The fund had a starting value of 2,105.33 Naira at the beginning of 2021 and has since climbed to 2,381.24 Naira, achieving a 13% growth rate. The index is regarded as a price index and is weighted by adjusted market capitalization (listed shares x closing price x capping factor).

The NGX Afrinvest Div Yield Index is one of the top-performing index funds in Nigeria, along with the NGX Oil and Gas, NGX Premium, and NGX Pension. While index funds in Nigeria are not as popular or stable as their international counterparts, the NGX Afrinvest Div Yield Index has consistently yielded good returns for investors.

Frequently asked questions