Nigeria’s cash market mutual fund yields common 20.58% in January: High performers and key insights
Within the face of Nigeria’s excessive inflation, cash market mutual funds have continued to draw investor curiosity with aggressive returns.
In response to the Securities and Trade Fee (SEC) valuation reviews, the common year-to-date (YtD) yield for the 38 funds stood at 20.58% as of January 24, 2025, with an mixture Web Asset Worth (NAV) of N1.887 trillion.
Notably, 28 of those funds recorded yields above 20%. This marks a big enchancment from the 9.73% YtD yield recorded in the identical interval final 12 months.
This efficiency additionally compares favorably to the 2024 full-year common YtD yield of 21.34%, reinforcing the attraction of those funds.
What are cash market mutual funds?
Cash market mutual funds are low-risk funding automobiles that pool funds from a number of buyers to spend money on short-term, high-quality {financial} devices. These sometimes embrace:
- Treasury payments
- Industrial papers
- Mounted deposits
- Different cash market devices
The aim is to offer buyers with liquidity, security, and aggressive yields, making them a lovely possibility, particularly in unsure {economic} situations.
Nevertheless, regardless of the sturdy yields, cash market mutual funds nonetheless lag Nigeria’s December 2024 inflation price of 34.80%, signaling the persistent problem of actual returns in an inflationary atmosphere.
As buyers search capital preservation and aggressive yields, sure funds have outperformed their friends, making them ones to observe within the coming months.
Listed below are the highest performers.
EDC Cash Market Fund Class B +24.98% Yield YtD
EDC Cash Market Fund Class B takes the lead with a 24.98% YtD yield, outperforming the business common.
Nevertheless, its comparatively small NAV of N1.967 billion (0.11% of whole NAV) and simply 9 unitholders elevate considerations about liquidity and investor focus dangers.
The excessive yield suggests an aggressive funding technique, however the fund’s scalability and talent to maintain this efficiency stay questionable.
CardinalStone Cash Market Fund +24.58%
CardinalStone’s Cash Market Fund is one other sturdy performer, providing a 24.58% YtD yield, a rise from its 2024 full-year yield of twenty-two.19%.
With a NAV of N2.375 billion and 312 unitholders, the fund demonstrates higher diversification and liquidity in comparison with EDC Class B.
Nevertheless, it stays a mid-sized participant and faces competitors from bigger, extra secure funds available in the market.
The fund is managed by CardinalStone Asset Administration Restricted.
Meristem Cash Market Fund +24.24%
Meristem’s fund supplied a 24.24% YtD yield, a rise from its 11.94% yield in January 2024.
Extra importantly, it boasts a powerful NAV of N20.961 billion, representing 1.11% of whole NAV, and is supported by 3,386 unitholders.
This measurement and investor base improve its stability, making it a extra dependable long-term funding possibility in comparison with smaller funds like EDC Class B and CardinalStone.
Anchoria Cash Market Fund +23.95%
Anchoria Cash Market Fund has additionally delivered a 23.95% YtD yield, up from 10.33% in January 2024.
Nevertheless, with NAV of N1.358 billion and 1,829 unitholders, it stays a comparatively small fund within the business. Whereas its yield is aggressive, its asset measurement limits its skill to compete with bigger gamers like Meristem and EDC Class A by way of long-term stability and liquidity.
EDC Cash Market Fund Class A +23.86%
In contrast to its Class B counterpart, EDC Class A has a a lot stronger NAV of N32.547 billion, accounting for 1.72% of whole market NAV, with 3,089 unitholders.
Regardless of yielding barely lower than Class B, its increased fund measurement and wider investor base make it a extra secure and scalable funding possibility.
Traders searching for a stability between excessive yield and fund stability could discover this a better option in comparison with riskier, smaller funds.
Different prime performers embrace
- First Ally Cash Market Fund +23.81%
- Chapel Hill Denham Cash Market Fund +23.65%
- RMBN Cash Market Fund +23.30%
- FBN Cash Market Fund +22.96%
- Coral Cash Market Fund +22.76%
Whereas the present excessive yields are engaging, their sustainability relies on key macroeconomic elements:
- Financial coverage: The Central {Bank} of Nigeria’s tight financial stance has stored rates of interest elevated, benefiting cash market funds. If this coverage continues, yields will stay aggressive. Nevertheless, any coverage shift in the direction of price cuts may cut back returns.
- Inflation impression: Regardless of sturdy yields, cash market funds nonetheless lag inflation, making actual returns adverse. If inflation continues to rise, these funds could wrestle to ship worth to buyers in actual phrases.
- Fund measurement and investor base: Bigger funds with various investor bases like Stanbic IBTC Cash Market Fund (NAV – N865 billion; +21.62% yield), FBN Cash Market Fund (NAV – N386 billion; +22.96% yield), Zenith Cash Market Fund (NAV – N61 billion; +22.66% yield), and ARM Cash Market Fund (NAV – N138 billion; +21.90% yield) are higher positioned for long-term stability.
- In distinction, smaller funds (like EDC Class B and Anchoria) could face liquidity challenges and larger threat publicity.
General, cash market mutual funds stay a lovely possibility for buyers looking for secure, short-term returns, particularly amid {economic} uncertainty.
Nevertheless, fund measurement, investor focus, and market dynamics will decide which funds can maintain their excessive yields over time.
Traders ought to fastidiously think about fund stability, liquidity, and threat publicity earlier than making funding choices.
