A mutual fund is an investment vehicle made up of a pool of funds collected from numerous investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by professional fund managers, who invest the fund's capital and attempt to produce capital gains and income for the investors. One of the main advantages of mutual funds is they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities. Each shareholder, therefore, participates proportionally in the gain or loss of the fund.
Advantages/Benefits of Investing in Mutual Fund
- Professionally Managed. Mutual funds are run by fund managers who are experts in their field. They also select suitable investments to achieve the objectives of the fund. It is a continuous process that takes time and expertise which will add value to your investment. Fund managers are in a better position to manage your investments and get higher returns.
- Diversification. Mutual funds spread their holdings across various investment vehicles, reducing the effect any single security or class of securities has on the overall portfolio. Because mutual funds contain hundreds or thousands of securities, investors are less affected if one security underperforms.
- Affordability. As a small investor, you may find that it is not possible to buy shares of larger corporations. With Mutual funds smallest investors can get started because of the minimal investment requirements.
- Liquidity. With open-end funds, you can redeem all or part of your investment any time you wish and receive the current value of the shares. Moreover, the process is standardized, making it swift and efficient
- Transparency. As a unit holder, you are provided with regular updates, for example daily NAVs, bid and offer prices as well as information on the fund's holdings and the fund manager's strategy.
- Regulations. All mutual funds are required to register with the Securities Exchange Commission. They are obliged to follow strict regulations designed to protect investors.
NSE Value Proposition for Memorandum Listing
- List on an International Exchange: The Nigerian Stock Exchange is a full member in the World Federation of Exchanges (the “WFE”), the global trade association for the operators of regulated securities exchanges. The NSE is the first West African stock exchange to be granted full Federation membership status. This is an important reference for international investors to your funds
- Higher public profile and visibility: Mutual funds listed on the NSE by memorandum listing benefits from a higher profile and visibility to the public engendered by increased coverage from analyst, media and investors (National and international), hereby increasing your distribution channel and reach to investors
- Enhanced transparency and integrity: Being on the memorandum listing enhances the funds credibility with subscribers and investors owing to best practice and governance standards required. Hence the requirement by PENCOM for Pension Fund Administrators (PFA) to invest in funds that are listed on a regulated Exchange
- Invitation for closing gong ceremony: The closing gong ceremony also provides a unique platform to create visibility for your fund, as well as to celebrate a corporate milestone. The ceremony is featured on the NSE website, television networks (such as CNBC Africa and Channels TV), as well as in print media – reaching millions of investors and market participants globally. It is introduced to showcase funds, and at zero cost to the fund manager
- Unique and Efficient Price Update Service: The NSE Fund Update Service provides Fund Managers with the ability to update the prices of their funds in an efficient, fuss-free manner. The prices are automatically disseminated to the Memorandum Listing Page on the NSE website, thereby offering investors and wider market participants real-time, up to date pricing and unprecedented ease of price dissemination for Fund Managers. Availability: This service will be available in 2017
- Comprehensive National and Global Market Data Dissemination Services: The NSE has one of the most extensive market data dissemination service in Africa. Our Memorandum Listing Price Dissemination Service allows Fund Managers to leverage our reputable distribution network, both nationally and internationally, to reach thousands of subscribers. The service provides daily distribution of fund prices to our market data vendors and subscribers via email for onward dissemination. Availability: Now
- Nominate Dissemination Subscribers via NSE Fund Manager Select: The NSE Fund Manager Select service allows Fund Managers to nominate up to 5,000 investors (or anyone they choose) to receive the closing price of the nominated funds under their management via email. Fund Managers can use this service to provide regulators, potential and existing investors with up to date market data on the price of funds under management to aid sales efforts and enhance the ability of investors to better manage their funds. Availability: This service will be available in 2017
- Robust pricing of Assets Under Management–Matching to NSE Closing Price (NCP): Leveraging our best in class technology and market data capabilities, the NSE NAV Calculator allows Fund Managers to mark the underlying assets of their funds to the NSE Closing Price (NCP), where the funds comprise of securities listed on the NSE. This unique capability provides both Fund Managers and investors with one of the most robust price discovery mechanism in Africa, being one of the few Exchanges that currently offers a closing price auction, allowing Fund Managers robust pricing information for assets under management. Availability: This service will be available in 2017
- Single Fund Price Alert Service: Investors can subscribe to receive the Fund Closing Prices at their convenience to a mobile phone of their choice. This simple, low cost service puts fund price information at the fingertips of investors, enabling Fund Managers to simplify in-house administration and cost relating to providing up to date fund prices to investors. As this service is delivered via the mobile phone network, a small fee applies to every SMS delivered under this service.Availability: This service will be available in 2017