…As analysts provide clues on best asset classes
Halo Equity Fund, Alpha Morgan Balanced Fund, Coral Balanced Fund and Guaranty Trust Equity Income Fund have emerged as the best mutual funds in 2025, according to the most recent data obtained from Weekly Net Asset Value Data of the Securities and Exchange Commission (SEC) Nigeria.
Investors found some significant value in these funds as they 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, they proved to be resilient and profitable choices.
Halo Equity Fund returned 52.33 percent to investors between early January and May 23. Coral Balanced Fund yielded 48.9 percent, while Guaranty Trust Equity Income Fund returned 41.11 percent. Similarly, UPDC Real Estate Investment Trust produced 29 percent return on investment.
More so, Capital Express Balanced FundA returned 25.58 percent to investors, while Comercio Partners Fixed Income Fund yielded 25.30 percent over the period. Others are: Zrosk Magna Equity Fund (25.17 percent), CardinalStone Money Market FundA (24.01 percent), and Nigeria Infrastructure Debt Fund (NIDF) (23.90 percent)
Mutual funds are created with the intent to pool funds from various investors who are willing to diversify holdings. Nigeria’s mutual fund has a total pool of N5.614 trillion, according to recent data from the Securities and Exchange Commission (SEC) of Nigeria.
Money Market fund rule 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 have been the best performing at 19.96 percent.
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.
Read also: Here’s why Money Market Fund is good despite declining rates
Yields dropping
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 have been slow but steady this year. The most recent yield on the one-year auction dropped to 23 percent recently from its peak of 30.77 percent in November 2024.
Money market performance
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 at 22.32 percent, and AVA GAM Money Market Fund at 22.13 percent).
Ethical funds were not left out of the gains, with an average performance of 19.15 percent. Its best-performing fund, ESG Impact Fund, gave a return of 20.36 percent as of May this year.
Ethical funds often take into consideration some agreed-upon ethical factors. Such factors can be set from a religious, environmental, social, governance, or other moral perspective.
Analysts’ view
Joshua Joseph, an analyst at Cordros, said that mutual funds are a good way for investors to put money into several asset classes without having direct exposure to it.
Joseph explained that though the NGX-ASI has performed roughly at nine percent year-to-date, the sectoral and individual performance of stocks listed have outstripped that of the index.
Where to invest your money
Types of mutual funds in Nigeria include: Equity-based funds, money market funds, bond/fixed income funds, Euro bonds, infrastructure bonds, ethical funds, balanced funds, and infrastructure funds.
According to Ayooluwade Ogunwale, a fixed income analyst at FBNQuest, investors with low risk can go for the fixed income funds, which 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 a low-risk appetite, the money market would have been your option.
“You can put your funds in the bond/fixed income mutual funds. If you have ethical bias, you might want to go for some ethical fixed income funds, the reason being that they are still able to stretch their returns compared to normal fixed income funds,” he said.
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 forex advantage.
“Naira mutual funds are typically invested in money market instruments like treasury bills, commercial papers, and stocks. These pay steady interest, which you can track in via an app,” they said.
Returns on naira funds are earned based on the amount invested and the daily interest
For example, If someone invests N100,000 today at 20 percent annual interest, they can expect to have earned N20,000 at the end of the year, giving them 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,” Cowrywise analysts said.
“That extra $10? Your profit. No interest, just a gain in fund value,” they noted.
They explained that for the exchange rate movement, the value of your dollar investment in naira increases if the naira weakens.
“So, If the exchange rate was N1,600/$ when you invested, your $100 was worth N160,000. And with a capital gain of $10, your $110 is worth N176,000,” they further explained.
“But if the exchange rate later moves to N1,700/$, your $110 is now worth N187,000. That’s an additional N11,000 gain purely from exchange rate movement.”
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