Nigerian investors are finding significant value in mutual funds this year, as the asset class has delivered an average gain of over 13 percent, surpassing the Nigerian stock market’s year-to-date return of 9.58 percent. Despite a steady decline in inflation and falling yields on traditional money market instruments, mutual funds have proven to be a resilient and profitable choice.
Mutual Funds are created with the intent to pool funds from various investors who are willing to diversify holdings. Nigeria Mutual fund have a total of N5.614 trillion according to recent data from the Securities and Exchange Commission (SEC) of Nigeria.
Among the best-performing funds so far in 2025 are: Halo Equity Fund (66 percent), Alpha Morgan Balanced Fund (52.33 percent), Coral Balanced Fund (48.9 percent), Guaranty Trust Equity Income Fund (41.11 percent), and UPDC Real Estate Investment Trust (29 percent).
Some others are: Capital Express Balanced FundA (25.58 percent), Comercio Partners Fixed Income Fund (25.30 percent), Zrosk Magna Equity Fund (25.17 percent), CardinalStone Money Market FundA (24.01 percent), and Nigeria Infrastructure Debt Fund (NIDF) (23.90 percent)
Money Market fund ruled the mutual fund market
BusinessDay’s analysis of the average returns of the different types of mutual fund performance so far this year showed that money market funds were the best performing at 19.96 percent. This is according to the most recent data obtained from Weekly Net Asset Value Data for collective investment schemes by SEC Nigeria .
A money market fund is a kind of mutual fund that invests in highly liquid, near-term instruments such as cash, promissory notes, commercial papers, and short-term treasury bills.
This is despite declining inflation rates which have led to a drop in rates of most money market instruments, many analysts recommend Money Market Funds as a good buy for investors.
With a drop in the inflation rate to 23.71 percent in April stoking a likely rate cut, yields on the money market have been dropping.
Treasury bill yields, has been on a slow but steady declibe this year, in the most recent yield on the one-year auction dropped to 23 percent from its peak of 30.77 percent in November.
While Money Market-based funds thrived in 2025, Cardinal Stone Money Market Fund performed slightly above the inflation rate with a return of 24.01 percent.
Among 2025’s best-performing Money Market funds are Zedcrest Money Market FundA at 22.93 percent, Chapel Hill Denham Money Market Fund (22.32 percent). AVA GAM Money Market Fund (22.13 percent).
Ethical funds were not left out of the gains, with an average performance of 19.15 percent, and its best-performing fund, ESG Impact Fund, gave a return of 20.36 percent as of May this year.
Ethical funds are mutual funds where investment decisions are made after taking into consideration some agreed-upon ethical factors. Such factors can be set from a religious, environmental, social, governance, or other moral perspective.
Joshua Joseph, analyst at Cordros, said that mutual funds is a good way for investors to invest in several asset class without having direct exposure to it.
Equity funds made third on the list despite the year-to-date performance of the Nigerian stock market All Share Index of 9.85 percent. Funds like Halo Equity Fund, and Guaranty Trust Equity Income Fund performed double Nigeria’s inflation at 66 percent, 41 percent, respectively.
Joseph explained that though the NGX-ASI has performed roughly 9 percent year-to-date, the sectoral and individual performance of stocks listed have outstripped that of the index.
Different strokes for different folks
Some of the types of mutual funds in Nigeria include the Equity-based fund, Money Market funds, bond/fixed income funds, Euro bonds, Infrastructure bonds, Ethical funds, Balanced funds, and Infrastructure funds.
Ogunwale said that investors with low risk can go for the fixed income funds, which still gave double-digit returns last year. “Currently we are in a period of lower interest rate largely because of the liquidity profile for this quarter, for an investor with low risk appetite the money market would have been your option but due to low interest and money markets are shorter dated so they are more reflective of whatever is happening at the intervals.”
“You can put your funds towards the bond/fixed income mutual funds if you have ethical bias you might want to go for some ethical fixed income funds reason being that they are still able to stretch their returns compared to normal fixed income funds,” he said.
Ethical funds are mutual funds where investment decisions are made after taking into consideration some agreed ethical factors. Such factors can be set from a religious, environmental, social, governance or other moral perspective.
For investors trying to decide between naira mutual fund or dollar- denominated fund, analysts at Cowrywise, a savings and investment platform, explained that naira mutual funds give capital preservation and stable daily interest, while dollar mutual funds offer capital gains and FX advantage.
“ Naira mutual funds are typically invested in money market instruments like treasury bills and commercial papers, stocks. These pay steady interest, which you can track in-app,” it said.
Returns on naira funds are earned based on the amount you invest and the daily interest
For example, If you invest N100,000 today at 20 percent annual interest, you can expect to have earned N20,000 at the end of the year, giving you a total of N120,000.
Dollar mutual funds are typically invested in Eurobond instruments, and the returns come mostly from either Capital appreciation or Exchange rate movement.
“ Capital appreciation – You buy units, and if the price goes up, your money grows. If you buy 100 units at $1 → $100 invested. If the unit price rises to $1.10, your investment is now worth $110.
That extra $10? Your profit. No interest, just a gain in fund value,” the savings platform explained.
It explained that for exchange rate movement, If the Naira weakens, the value of your dollar investment in Naira increases.
“ So, If the exchange rate was N1,600/$ when you invested, your $100 was worth N160,000. And with a capital gain of $10, your $110 is worth N176,000,”
“But if the exchange rate later moves to N1,700/$, your $110 is now worth N187,000. That’s an additional N11,000 gain purely from exchange rate movement,” it said. (BusinessDay)
