Nigerian bourse ETFs product hits N4.2bn

By Kayode Ogunwale

The efforts of the Nigerian Stock Exchange (NSE) to develop other products has started yielding positive result, as Exchange Traded Funds (ETFs) market growth to N4.24 billion over five years.

Speaking at the annual ETFs workshop in Lagos, Chief Executive Officer, the NSE Mr. Oscar Onyema said ETFs have become a huge success story as it rose from N287.5 million in 2011 when it introduced to N4.24 billion.

“In the NSE, ETFs were introduced in December 2011 with cross listing of Newgold ETF with Assets Under Management (AUM) of N287.5 million to provide investors’ with new opportunities to diversify their portfolios and access the market. As at today, we’ve recorded about 1,900 per cent growth in our ETF market with total AUM of about N4.24 billion as at September 2016 on eight ETFs currently listed and traded on the Exchange.”

The ETFs available for trading on Nigerian bourse includes; 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.

He said experts have predicted the continued growth of the ETF industry estimating that global AUM will reach at least US$7 trillion by 2021.

According to Onyema, Global ETF Assets Under Management (AUM) have grown from US$1.4 trillion in December 2010 to about $3 trillion as at April, 2016 representing over 102 per cent cumulative growth over the last five years.

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, he stated.

“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 stated.