MON NOVEMBER 7 2016-The Nigerian Stock Exchange (NSE) Exchange Traded Funds (ETFs) introduced December 2011 achieved one of the fastest global growth record with a total of 1,900% over the period to September 2016 with Assets Under Management (AUM) reaching N4.24 billion. Eight ETFs are currently listed and traded on the Exchange. They include Newgold ETF, Vetiva Griffin 30 ETF, StanbicIBTC ETF 30, Lotus Halal Equity ETF, Vetiva Sector Series ETFs- Banking, Consumer Goods and Industrial, and Vetiva S&P Nigerian Sovereign Bond ETF (6 equity backed, 1 commodity ETF and 1 bond ETF).
“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,” according to Oscar N. Onyema, OON, who disclosed the figures while addressing investors and participants at the ongoing Exchange Traded Funds (ETFs) Workshop in Lagos. He 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. Asides 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,” he said. He said 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. ETFs have become a huge success story, as Global ETF Assets Under Management (AUM) have grown from US$1.4 trillion in December 2010 to about $3trillion as at April, 2016 representing over 102% cumulative growth over the last five years. Experts have predicted the continued growth of the ETF industry estimating that global AUM will reach at least US$7 trillion by 2021. Onyema noted that in the NSE, ETFs were introduced in December 2011 with cross listing of Newgold ETF with AUM of N287.5m to provide investors’ with new opportunities to diversify their portfolios and access the market. He told workshop participants that as part of The Exchange’s efforts to develop the ETF market, the workshop is organised to create awareness of the product, 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.” The event is co-sponsored by Lotus Capital Ltd, Stanbic IBTC and Vetiva Fund Managers Ltd. The Securities and Exchange Commission (SEC), Central Securities Clearing System (CSCS), Nigerian Sovereign Investment Authority (NSIA), Asset Management Corporation of Nigeria (AMCON), and the National Pension Commission (PENCOM) were also mentioned for their contribution to the workshop. Onyema 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. I wish you all fruitful deliberations.