FBN Capital Asset Management has topped the chart in the BusinessDay Research and Intelligence Unit (BRIU) transparency index, having scored 73 points out of a possible 100 points, ahead of AXA Mansard that came second with 69 points. Vetiva Fund Management scored 65 points to rank third on the chart.
The BRIU report entitled ‘Nigerian Mutual Fund Managers Transparency Report‘ evaluated fund managers registered with the Securities and Exchange Commission (SEC), and ranked them based on various criteria: whether information about the fund is available online and on the fund managers’ website, how recent the information is, and the extent of information provided.
Despite the reported growth in Nigeria mutual fund market, the report showed that most Nigerian largest fund managers lack full transparency. This means that investors lack information to independently estimate the risk and return characteristics of their portfolio.
According to the BRIU transparency report, 58 funds, representing 86.57 per cent of the mutual funds registered with SEC as at the week ended October 27 had information on the returns.
FBN has the most recent fund fact sheet; as all their funds provide information on returns and management fees but none on expense ratio.
The only fund managers that provide information on expense ratio are Vetiva Fund Managers Ltd (DV Balanced Fund) and Investment One Funds Managers Ltd (Vantage Guaranteed Income Fund, Vantage Balanced Fund, and Abacus Money Market Fund).
ARM’s 62.25 points transparency score made the fund manager rank fourth on the transparency chart, while Lotus Capital with 54 points transparency score ranked fifth.
Having scored 52 points on the transparency chart, First City Asset Management placed sixth; Stanbic IBTC Asset Management with 51.26 points transparency score completed the top seven most transparent mutual fund managers.
While there is no explicit regulatory requirement from the mutual fund managers to disclose relevant information to aid proper decision making by investors in this asset class, the report noted that fund managers should make information available at all times and not just on request.
The BRIU report decried a situation in which fund managers provide information to investors mostly after they might have convinced them to invest their money in their respective mutual funds.
The report further showed that fund managers that ranked the same (and the least) are Alternative Capital Partners Ltd, Afrinvest Asset Management Ltd, Chapelhill Denham Management Ltd, Cordros Asset Management Ltd, and FSDH Asset Management Ltd.
Other managers that ranked low are Greenwich Asset Management Ltd, PAC Asset Management Ltd, SCM Capital Ltd, SFS Capital Nigeria Ltd and Zenith Asset Management Ltd. These mutual fund managers all ranked at 12th on the transparency scale, having scored only 38 transparency points.
The most transparent of all the mutual funds are the bond funds, with a transparency level of 57.50 per cent. They are followed by ethical funds and equity funds, which have transparency levels 51.60 per cent and 51.33 per cent. Mixed funds, money market funds, and fixed income funds have transparency levels of 47.46 per cent, 47.15 per cent, and 44.70 per cent respectively.