Agusto & Co’s 2023 Asset Management report (the Report) focuses on the activities of non-pension asset management companies in Nigeria, as well as the various products available in this space. The Securities and Exchange Commission (SEC) regulates the non-pension market, which includes over 107 operators, who manage collective investment schemes, segregated portfolios (on a discretionary and non-discretionary basis) and alternative assets. A separate report covers the pension industry.
Nigeria remains one of the largest investment management zones in sub-Saharan Africa, after South Africa and Morocco with an estimated ₦3.5 trillion ($7.8 billion) in assets under management at the end of 2022 – a 25% growth over the prior year. The growth stemmed from the gradual rise in the yields offered on naira-denominated investment securities following the increase in the MPR in Q4’22, as well as growth in dollar-denominated portfolios.
The Industry’s product offerings could be classified into three key segments – Collective Investment Schemes (CISs), Segregated Portfolios and Alternatives. CISs, also known as mutual funds, are investment vehicles through which clients’ funds are aggregated and managed as a pool. Privately managed funds, which may be discretionary or non-discretionary, are referred to as segregated portfolios. In Nigeria, alternatives typically include non-traditional assets and investments such as REITS, private equity and infrastructure funds.
For the first time in three years, segregated portfolios were estimated to account for more than half of managed assets at 52% (or ₦1.76 trillion), as investors moved away from the often more restrictive and relatively conservative collective investment schemes. CISs, thus accounted for a lower 42% share, while alternative assets – comprising publicly-listed private equity, REITs and infrastructure funds – accounted for 6% of the Industry’s managed assets or ₦345 billion as at the same date.
Agusto & Co. expects a moderate increase in the size of the Industry’s managed assets, with an estimated average growth rate of 15.9% over the next three years, resulting in a rise in the Industry’s managed assets to ₦4 trillion by 2024. In our opinion, growth will be propelled by higher yields, increased investments from pension fund administrators and institutional clients, and funds being invested in international money markets to safeguard against the weakening naira. However, we acknowledge that the continuous deterioration of macroeconomic fundamentals could pose a significant risk to our growth forecast as real incomes decline further.
This report provides useful insights into various aspects of the Nigerian Asset Management Industry. Key benefits of the report include: